Gulf Business - August 2011

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!$GB August 2011.indd 1 8/7/11 9:58:47 AM
Gulf Business 206x270 E.indd 1 6/22/11 5:39 PM
CULF BUSlNLSS&,
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/ REGIONAL NEWS, PEOPLE, NUMBERS AND EVENTS
FG@E@FEJ
(/ MISHAL KANOO
Whats so wrong with retirement?
)( MATEIN KHALID
Dubai is the next private banking hub.
)* DR TOMMY WEIR
Treat future leaders like your sons.
), DIPAK JAIN
EMBAs offer global insight for a broader impact.
)- JOHN CHAPPELEAR
The importance of strategic thinking.
9I@<=@E>
)/ FINANCE
Pulling Dubai Inc. into the black.
*( AVIATION
Gulf Air battles unrest.
*) REAL ESTATE
Arabs snap up London properties.
*+ FINANCE
Deutsche Bank gives roadmap for the Gulf.
*- RETAIL
Local teens splash the cash.
*0 INSURANCE
The Arab Spring boosts liability insurance.
+( JOBS
Creating Arab opportunities.
+* INDUSTRIES
Saudi Arabias manufacturing drive.
:FEK<EKJ
'/%)'((
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*)
*-
:FM<I;<J@>E1 1ARAK PARLKH
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CLO OF DAMAS, ANAN
FAKHRLDDlN, 1ALKS 1O
>LC=9LJ@E<JJABOU1
PLANS, PROBLLMS AND
PROFl1S.
++
)/
5-6 Contents August 2011.indd 5 7/27/11 5:00:35 PM
-&AUCUS1 20
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Obaid Humaid Al 1ayer
>IFLG<;@KFI8E;D8E8>@E>G8IKEIFLGJ<E@FI<;@KFI
Cina Johnson
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Cuido Duken
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1arak Parekh kXiXb7dfk`mXk\%X\
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Farooq Salik: Naveed Ahmed: Vikram Cawde
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Sabah Haider: Dania Saadi: Ryan Harrison:
RoberL Bailey: PeLer ShawSmiLh: MarLin Morris
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AnLhony Milne Xek_fep7dfk`mXk\%X\
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Joe MarriLL af\7dfk`mXk\%X\
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PrinLed by LmiraLes PrinLing 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,
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,' CUSTODY BATTLE
Global banks are gearing up for a ght over asset
management in the region.
,+ EGYPT AND THE GULF
The status of the regions investments in Egypt.
,/ HOME STRETCH
Governments must build millions of Gulf houses in the
next decade.
-) DIGGING FOR TREASURE
The Gulfs minerals and mining drive.
-- MANAGING RISK
Banks shore up tier one capital for Basel III rules.
;8K8:ILE:?
.' STATS
Regional mergers, acquisitions and bond issuances.
;FNEK@D<
.+ TRAVEL
Walk Jane Austens history in Bath, UK.
.. CRUISE
Reviewed: Maserati Quattroporte GTS.
.0 PLACES TO BE
The Banyan Tree, RAK.
I<>LC8IJ
/' GULF BUSINESS PREFERRED HOTELS
A selection of the regions top rooms.
/( EVENTS
The Gulfs top business conferences.
/) IN YOUR SHOES
Pipers Marina Diaz.
,/
:FEK<EKJ
5-6 Contents August 2011.indd 6 7/27/11 5:00:37 PM
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RLClONAL NLWS, PLOPLL, NUMBLRS AND LVLN1S
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-10.6%
100
BD836m
QR122.3m
1he decline in loreign asseLs held by KuwaiL' cenLral
bank during May, leaving June's LoLal aL KD6. billion,
compared Lo KD6.8 billion a monLh earlier.
1he number ol companies caughL louLing OaLar's
labour laws beLween June 26 and July 29 lollowing
a governmenL healLh and saleLy crackdown
Bahrain's budgeL delciL in 20 as Lhe governmenL's
lorecasLed BD2.29 billion income lails Lo cover Lhe BD3.2
in emergency public spending.
Vodalone OaLar's lrsLquarLer loss, down lrom
OR^8. million a year earlier, buL beLLer Lhan Lhe
OR37 million loss LhaL analysLs had expecLed.
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M&A acLiviLy in Lhe Middle LasL slumped ^0 per cenL in Lhe lrsL hall
ol 20 on conLinuing lears over insLabiliLy in Lhe region, according
Lo a reporL. 1he volume ol deals done on Middle LasLern soil hiL S7
billion, a ^0 per cenL drop lrom Lhe lrsL hall ol 200 when acLiviLy
LoLalled S.7 billion, Lhe 1homson ReuLers sLudy lound.
Real esLaLe dominaLed acLiviLy, wiLh 33 per cenL (S2.3 billion) ol all
M&A low. BuL Lhis lgure was down lrom S^.5 billion during Lhe lrsL
six monLhs ol lasL year.
1he UAL was Lhe busiesL ol all Middle LasL counLries, reporLing
deals worLh S3.7 billion, jusL over hall ol all volumes.
1homas ReuLers' analysis also ranked invesLmenL banks
involvemenL in M&A. BNP Paribas, France's largesL bank, Lopped
Lhe Any Middle LasLern lnvolvemenL M&A ranking wiLh S0. billion,
wiLh USbased Coldman Sachs in second place wiLh S9.3 billion.
Meanwhile, CiLi and CrediL Agricole Lopped Lhe Middle LasLern LargeL
M&A ranking wiLh S950.2 million.
1he sLudy said invesLmenL banker lees were down ^6 per cenL Lo
S97 million, while debL issuance dipped Lo S.2 billion, a drop ol 6
per cenL compared Lo lasL year. Russell HaworLh, managing direcLor
lor Lhe Middle LasL & Alrica aL 1homson ReuLers, said: "1hese lgures
show LhaL iL has been a Lough year so lar LhroughouL Lhe region lor
invesLmenL banks, wiLh banker lees comparable wiLh 200^ levels."
1here was a rise in equiLy capiLal markeLs (LCM) issuance, wiLh
volumes reaching S8.3 billion, an 8 per cenL increase againsL S^.6
billion in 200.
8-17 GCC Today.indd 8 7/25/11 12:55:12 PM
CULF BUSlNLSS&0
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1he secondquarLer prolL ol Saudi lnLernaLional PeLrochemical
Co., known as Sipchem, represenLing a jump 88.6 per cenL year
onyear on higher sales and prices.
1he amounL Oman's Bank Dholar has
been ordered Lo pay inLo an enlorcemenL
courL's accounL in a lawsuiL lled by rival
Oman lnLernaLional Bank.
1he cosL ol a new mandaLory 'passenger saleLy lee' being
levied aL UAL airporL users lrom 28 July, a charge LhaL
will be builL inLo LickeL prices.
1he drop in renL prices in Abu Dhabi lor "inLerior qualiLy and
old buildings", according Lo properLy consulLanL Jones Lang
LaSalle.
8-17 GCC Today.indd 9 7/25/11 12:55:13 PM
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urrest.
On the Radar $100bn to salvage MENASA growth
DIFC economist
The Middle East, North Africa
and South Asia (MENASA)
region needs up to $100
billion in infrastructure
investment per year to avoid
a collapse in economic
growth, according to leading
economist Nasser Saidi.
The Arab Spring
highlighted the need for
massive investment in
infrastructure to achieve
more inclusive growth and
job creation, said Saidi,
who is the chief economist
of the Dubai International
Financial Centre.
In order to stimulate
infrastructure development,
the private sector needs
to play a bigger role in
supplying funds across
the region, he said. Saidi
added: Well developed
infrastructure is a long
lasting contributor to a
transformation of economies
and societies, to the upward
shift in productivity and in
productivity growth.
Saudi Arabian LourisLs have helped Lo geL
Bahrain's hospiLaliLy secLor back on iLs leeL
alLer monLhs ol poliLical violence, according
Lo CB Richard Lllis. 1he research lirm said
Saudis were reLurning Lo Lhe island sLaLe
in parL because Bahrain's governmenL
inLroduced a measure Lo waive iLs levy on
hoLels lor Lhree monLhs lrom July.
1he governmenL's cabineL said Lhe live
per cenL lee levied on hoLel services would
be scrapped unLil SepLember as parL ol Lhe
ellorLs being exerLed Lo boosL Lhe Lourism
secLor, which has been rocked by recenL
uprisings. Some hoLels reporLed occupancy
raLes have lallen Lo as low as live per cenL.
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8-17 GCC Today.indd 10 7/25/11 12:55:14 PM
()&AUCUS1 20
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Kuwait agrees on new home Ior
Canadian troops
Etihad
cruises
through
turbulence
How to rule
the world like...
Medical tourists fleeing protest-
hit Jordan could boost GCC
countries healthcare sectors,
according to Business Monitor
International (BMI). Jordans
Private Hospital Association
reported recently that its
members had seen a 25 per
cent fall in patient numbers
as a direct consequence of
regional instability. BMI said
more stable states in the GCC
could attract jittery Jordanian
patients. Jordans medical
tourism sector, worth about
$1billion, has been hit by
Islamist-led protests, some of
them violent, which have been
taking place since the start of
the year.
LLihad Airways has
reporLed iLs mosL
successlul lirsL hall
ol Lhe year in iLs
hisLory despiLe poliLical
Lurbulence in Lhe
region. Revenues rose
28 per cenL year
onyear Lo S.3^2
billion in H, bringing
iL closer Lo iLs goal
ol breaking even Lhis
year and moving inLo
susLainable proliLabiliLy
in 202. DespiLe
poliLical unresL in Lhe
Middle LasL and Lhe
Japanese earLhquake,
seaL lacLor increased
Lo 72.9 per cenL, up
againsL 72.5 per cenL
in Lhe lirsL hall ol 200
according Lo Lhe airline.
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WinIrey branched out in January and
launched her selItitled CWN television
network, a move that guarantees her Iuture
role in shaping the direction oI American
media and culture.
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5he has made it her mission to change the
lives oI her show's millions oI viewers. Her
endorsements, particularly on consumer
products, are so powerIul they've been
dubbed 'The Cprah EIIect'.
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WinIrey Iamously surrounds herselI with
the great and the good oI the U5 celebrity
world, and considers Maria 5hriver, Martha
5tewart and Ellen Degeneres close Iriends.
JGI<8;K?<N<8CK?
WinIrey has Iamously overcome her
own disadvantaged youth to become a
beneIactor Ior others, personally donating
more oI her own money to charity than any
other perIormer in America.
>8@ELE@M<IJ8C8GG<8C
5he has become increasingly popular in the
Arab world. Her modest dress and history
oI adversity and abuse has struck a chord
with some women in more conservative
countries, including 5audi Arabia.
Jordan health kick for GCC
Kuwait has become the new home for the Canadian
military in the Gulf, just months after a UAE-Canada
spat ended in hostility. Canadas defence minister
Peter MacKay said the new transit base would
support the movement of equipment and vehicles to
and from Afghanistan
A bust-up over airline landing rights had resulted
in the UAE shutting down the Canadian Forces Camp
Mirage military base.
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CLO ol Lhe Oprah Winlrey NeLwork (OWN)
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NCB Capital Islamic fund market share drops
Saudi-based NCB Capitals pursuit of
discretionary mandates will reduce its
share in the Shariah compliant mutual
fund market to 30 per cent in 2011, from
37 per cent last year. The drop is being
partly attributed to the rising competition
in Saudis mutual market. It will be NCB
Capitals lowest share of the kingdoms
Islamic funds industry since 2009.
The mutual fund market has expanded a
lot and theres a lot of new players coming
in, so the pie is starting to spread out, the
banks CEO Jawdat Al-Halabi said. Plus,
weve been deliberately converting money
market funds into discretionary mandates, so
there has been a noticeable shift.
Wealthy investors are increasingly seeking
customised funds with individually designed
investment guidelines. As a result, firms
Discretionary Portfolio Management service
grew assets under management by 20 per
cent in 2010. Meanwhile, in 2010, NCB
Capital relocated 30 regional wealth advisors
to its main Saudi branches to be closer to its
biggest clients.
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On the Radar
1he CLO ol OaLarbased
real esLaLe developer
Msheireb ProperLies spenL
July in London on a lunding
roadshow Lo sLump up
inLeresL in a OR20 billion
projecL Lo Lranslorm
downLown Doha.
lssa M. Al Mohannadi
said Lhe Msheireb projecL
will Lranslorm a 3hecLare
siLe in Lhe old commercial
disLricL ol Doha. 1he
mixeduse developmenL will
comprise more Lhan 00
buildings, including 900 residenLial uniLs, reLail and ollice space, as well as hoLels and
culLural aLLracLions.
"Msheireb, Lhe world's lirsL susLainable downLown regeneraLion projecL, is realising a new
archiLecLural language lor OaLar and delivering on exacLing environmenLal sLandards Lhrough
Lhe combinaLion ol modern Lechnology and LradiLional principles in susLainable design," he said.
Msheireb ProperLies' London visiL, which Look place during Lhe lirsL week in July, lorms parL
ol a wider push by OaLar Lo generaLe inLernaLional invesLmenL in Lhe counLry's emerging non
oil and gas secLor.
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project focus
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Lo 20
'City oI LiIe' director
new Iace oI Pange
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Zain 5audi Arabia
cuts losses
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8-17 GCC Today.indd 14 7/25/11 12:55:21 PM
(-&AUCUS1 20
Abu Dhabi green energy lirm Masdar plans Lo compleLe
Lhe lirsL phase ol iLs Londonbased ollshore wind larm by
Lhe end ol 202, Lhe company has conlirmed. 1he London
Array developmenL is seL Lo be Lhe largesL projecL ol iLs kind
anywhere in Lhe world.
Masdar said iL has already compleLed groundwork aL Lhe
1hames LsLuary locaLion in London, and onsiLe work is
progressing as Lhe company remains on Lrack Lo meeL iLs
LargeL ol insLalling 630 megawaLLs ol power by Lhe end ol
nexL year. London Array is also expecLed Lo conLribuLe Lo
Lhe expanding wind energy secLor ol Lhe UK, whose capaciLy
accounLed lor more Lhan hall ol Lhe global ollshore wind
energy markeL in 200.
1he projecL is being developed by Denmark's DONC Lnergy
and Cermany's L.ON and will resulL in CO2 savings ol 925,000
Lonnes a year.
MASDAR SETS 2012 TARCET
F0R L0ND0N ARRAY
PR0JECT PHASE 0NE
GCC and the world
150%
JK8KJ
1HL PROFl1 lNCRLASL A1 ABU DHABl AVlA1lON FOR
1HL FlRS1 HALF OF 20, AS NL1 lNCOMLS JUMPLD
1O ALD8.6 MlLLlON.
Lack cf diversity hurts CuIf
1he lack ol diversilicaLion
in Cull economies
will conLinue Lo pose
challenges Lo Lhe region's
banks over Lhe nexL
crediL cycle, according
Lo a recenL Moody's
lnvesLors Service reporL.
1he raLings agency ciLed
dependency on oil and
gas exporLs as Lhe main
lacLor underpinning Lhe
banks' sLrucLural asseL
qualiLy challenges, in
addiLion Lo Lhe ongoing
poliLical Lurmoil.
Oil-producing nations in the
Gulf have invested more than
$73 billion into chemicals
projects as they plan for life
after oil, according to a study.
Saudi Arabia emerged as
the largest chemicals investor,
pumping nearly $51.2 billion
into developing chemicals
plants. It represented 70
per cent of the GCCs total
petrochemicals investments,
research by the Doha-based
Gulf Organisation for Industrial
Consulting found.
Qatar came second,
with investment of $10.5
billion. Meanwhile, chemical
investment stood at $4.6
billion in Kuwait, $4.2 billion
in Oman, $2 billion in the UAE
and $488 million in Bahrain.
The plants develop basic
chemicals used for pesticides,
paint, inks, soaps and cleaning
products.
GCC chemical spend hits $73bn
Dcha crcwned cheapest fcr
expats
Doha has been named Lhe leasL expensive ciLy in Lhe Cull lor
expaLs, according Lo a reporL by consulLanLs Mercer.
1he lirm's 20 CosL ol Living survey ciLed Lhe conLinuous
drop in Lhe OaLari capiLal's accommodaLion cosLs, coupled
wiLh sLabiliLy and securiLy, as Lhe main reason lor iLs low cosL
ranking. Doha was lisLed 67Lh on Lhe inLernaLional survey,
behind Abu Dhabi, Dubai, Riyadh, Manama, KuwaiL, MuscaL
and Jeddah. 1he UAL capiLal ranked 67Lh on Lhe global lisL,
making iL Lhe mosL expensive ciLy in Lhe Middle LasL lor expaL
workers, lollowed by Dubai in Lhe 8sL spoL.
1he survey compared cosLs ol lood, housing, LransporL and
cloLhing in iLs lisL ol over 200 ciLies.
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SOAPBOX
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8-17 GCC Today.indd 16 7/25/11 12:55:23 PM
CULF BUSlNLSS&(.
CCC T0DAY
Saudi Basic lndustries Corporation's (SABlC) net prolit
has |umped 6 per cent lrom SR5.02 billion in the second
quarter ol last year to its current SR8.0 billion. 1he
marked increase came as a result ol rises in production,
sales volume and improvement in sales prices, the
company said.
Analysts expected SABlC, the world's biggest
petrochemical lirm by market value, to post, on average,
a net prolit ol SR7. billion lor the second quarter.
J89@:e\kgif]`kaldgj-(kf
Y\XkXeXcpjk]fi\ZXjkj
COMPANY focus
Dubai Holdings main unit, Dubai Holding Commercial Operations
Group (DHCOG), is expected to sell its entire telecom assets over
the next three years to refinance future debt maturities and focus
on paying contractors, according to J.P. Morgan.
The investment bank said DHCOG may sell its $2 billion
telecom portfolio by 2015 as it focuses on the repayment of
an estimated $2 billion in contractor liabilities. According to a
report by Thomson Reuters, the telecom portfolio includes a
19.5 per cent stake in UAE operator du and a 35 per cent stake
in Tunisie Telecom.
Earlier this month DHCOG said it had repaid the $250 million
Swiss franc bond which matured on July 14, thus bringing its
total debt from $4.45 billion in 2008 down to $3.6 billion. The
company also made Dh2 billion in payments to contractors in 2010
and said it would continue to negotiate with contractors on a one-
on-one basis.
Dubai Holdings $2bn telco
assets up for sale
30
J<:FE;JKFD8B<J<EJ<F=%%%
J?FGG<ID8IB<K@E>
Sc what is shcpper marketinc?
People behave differently
when they are in shopper
mode than they do when they
are going about their normal
daily lives as consumers. So
as shopper marketers we use
insight into their behaviour,
to deliver communications that
inspire purchase momentum and
overcome barriers to purchase.

Hcw heaviIy dces shcpper marketinc pIay cn the
psychcIccy cf shcppers?
Consider the different mindsets between sitting on
the sofa whilst watching an advert for a cereal brand
versus the reality of standing in the breakfast aisle of
your local grocery store and staring at an overwhelming
choice of brands. The consumer may have a lot of time
for your brand when they are at home and may even
consider the purchase but when doing the weekly shop,
they often default to information available in-store.
What are the tccIs that shcpper marketers use tc
understand shcppers then?
We will immerse ourselves in anything which helps
improve a shoppers life, whether that is way-finding
in-store or from the car park, POS promotions, in-store
TV, digital communication, experiential marketing,
direct marketing or loyalty programmes. The world
of shopping doesnt start and finish in a shop, so our
ideas travel beyond the store and we employ a wide
range of media tools and tactics throughout the entire
shopping cycle.
Hcw dces dicitaI ccmmunicaticns and scciaI media pIay
a part in shcpper marketinc and a shcppers path tc
purchase?
It would seem many companies are seeing presence
throughout social media as an awareness generating
initiative, which in some way replaces or enhances
above-the-line activity. But the potential of social media
is not just an increase of brand awareness. Its power
lies in its affect on inspiring Purchase Momentum.
At a simple level, this could be a recipe guide that
can be downloaded as a shopping list on an iPhone,
or a price comparison tool. Or more technologically
speaking, the next frontier in the Middle East will be
QR codes which are already popular in Asia and the
West but have not quite reached our shores.
R!CHARD N!C0LL
Managing director ol
Saatchi and Saatchi
X MLNA
8-17 GCC Today.indd 17 7/25/11 12:55:25 PM
(/&AUCUS1 20
FG@E@FE
HAT IS THE PROBLEM WITH PEOPLE IN
the Gulf and retirement? It is as if this word was the most diabolical
word any owner/manager could come across. The question is why?
As a member of a family business, this concerns me more than that
of the head of a corporation simply because successful corporations
not only mandate retirement, they mandate succession plans to allow
the retirement to go smoothly. Moreover, they also ensure that the
person who is retiring is not left out in the wind by securing the
balance of his or her financial future. That, I am sorry to say, is not
the norm for most family businesses and certainly not for family
businesses in the Gulf.
In the Gulf, the idea of retirement is tantamount to saying your time
is up, thank you and have a good rest of your life. That is not a bad
idea if the retiring person has something to do. Unfortunately, most
retirees have dedicated such a long time to their way of life via work
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that they end up with no life after. The idea that
someone should retire to enjoy being with his family
is an insult to them as this wounds their pride.
The best way to help him move on to the next
stage in life is to explain that retirement has several
phases that a company can indulge in. This can be
accomplished through retiring the person from an
operational level while still playing an active role on
the board. Also, the setting up of foundations helps
the person migrate from the business to more family-
oriented issues, such as charity. So while still keeping
his social prestige, the retiree is allowed to migrate
from a stress-filled role to a more enjoyable one.
Lastly, and this would be the best solution, is that
the retiree understands for himself that he has played
his role and it is time for him to move on without
causing too much of a fuss. In order to do that, he must
realise that even if the company was to collapse under
the actions of those who succeed him, that means
that either he did not do his job correctly by properly
imbedding his ways into their psyche or perhaps he
stayed too long to allow the young ones to fail and
thus learn from their failure. He must also be gracious
enough to honestly commend those who do better than
he did and encourage them to do more rather than be
disgruntled that others are better than he was.
Here is a list of signs to be aware that someone is
ready to retire:
When he says, In my day... or Back when/in...
When his memory starts to fade and he cant
remember what he said a few minutes ago.
When he talks about the mobile as though it was just
a portable phone.
When he has no idea what the internet is or how to
use it.
When he believes that longevity equals right. That is
to say, he has outlived all the others and, therefore, he
has the right to take over.
When he calls men over 40 the youth of the company.
Retirement is a joy that all people should look forward
to. It is the reason we have children. To enjoy the
balance of what we have left with the people who love
us and we love back. All the money and power that we
have earned will not remember us when we die.
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COMMENT
lL can be dillculL Lo convince Lhe elders LhaL Lhey have served
Lheir Lime, buL iL's a musL lor company viLaliLy
@KJK@D<KFI<K@I<N?<E%%%
Mishal Kanoo is deputy chairman,
Kanoo Group.
18 Column Kanoo.indd 18 7/25/11 12:59:42 PM
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G_Bsiness GROUP 270x206-E.indd 1 6/12/11 4:12 PM
CULF BUSlNLSS&)(
FG@E@FE
COMMENT
WiLh regional unresL and sLricLer banking regulaLions in Lhe WesL,
Lhe Lime is ripe lor Lhe UAL Lo grow iLs privaLe banking secLor
Matein Khalid is fund manager in a
royal investment ofce and a writer
in nance and geopolitics.
K?<NFIC;JE<NGI@M8K<
98EB@E>?L96
t
HE PAST THREE YEARS HAVE WITNESSED
a strategic transformation in the GCC private banking industry. The
political turmoil in Bahrain, Egypt, Tunisia, Syria, Lebanon and Yemen
has naturally boosted flight capital from the Arab world to private
banking hubs such as Luxembourg, Switzerland and Singapore.
However, Dubai has also emerged as the regions private banking
hub, thanks to the political stability and safe haven status of the
UAE, as well as the cosmopolitan ambience and regulatory umbrella
of the DIFC. Ironically, banks such as UBS, Citigroup, RBS and
BOA Merrill Lynch, which lost tens of billions of dollars investing
in financial derivatives and subprime mortgages during the credit
bubble, have boosted their regional presence in private banking as a
fee income growth opportunity that does not require huge swathes
of bank capital or forces shareholders to assume balance sheet risk.
The US Dodd Frank bill, which forces banks to scale down their
proprietary trading and ownership of hedge funds/private equity firms,
has also encouraged Wall Street investment banks Goldman Sachs,
Morgan Stanley and J.P. Morgan Chase to boost their global wealth
management franchises. It is no coincidence that all the major Swiss
private banks Credit Suisse, UBS, Julius Baer, Pictet, Lombard Odier,
Bank Clariden Leu and even the joint venture Bank Sarasin Alpen are
all represented in the DIFCs constellation of global wealth managers.
The cluster effect in private banking is invaluable for Dubai as an
entire ecosystem of specialist bankers and service providers (lawyers,
accountants, credit specialists) enables banks to quickly scale up their
businesses. The impact on the wider UAE banking system is also visible,
GI@M8K<98EB@E>@EL8<@J8>FC;
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as regional capital inflows have boosted UAE bank
deposits above $300 billion in 2011. In essence,
despite the woes of the property markets and
anemic net credit growth, the UAE banking system
can well increase its deposits at almost double
digit rates, a fact that will only boost the UAEs
safe haven status, attract the crme de la crme
of international finance to the DIFC and enhance
the local banking systems earnings growth rate.
The frequent and at times arbitrary asset freezes
imposed by the US and EU will also benefit the
long-term growth of wealth management centres in
Southeast Asia and the Middle East.
The GCC has been a nodal point of global
private client liquidity ever since the OPEC
petrodollar bonanza in the 1970s. Political risk
in countries such as Lebanon, Pakistan, Iran and
Egypt have also attracted regional capital flows
into the UAE. The Cap Gemini Merrill Lynch 2010
World Wealth Report estimates that 400,000 high
net worth investors in the Middle East control
no less than $1.7 trillion in assets. The private
banking market in the Gulf is a natural El Dorado
for both global and GCC banks.
The new realities of GCC finance provide
an exceptional opportunity for UAE banks to
build scalable, world-class private banking and
wealth management franchises. It is mission
critical to design product platforms and service
capabilities that address very specific client
segments in the UAE. The ethos of private
banking mandates an obsessive focus on the
most sophisticated investment advisory process
possible, global strategic alliances with specialist
wealth managers and the cultivation of long-term
client relationships. It is myopic to focus only on
product sales and the risk reputation of the brand.
The UAEs role as the regional safe haven offers
local banks strategic ballast to build their brand
and create innovative platforms. Private banking
in the UAE is a gold mine but gold mines do
not mine themselves. They have to be nurtured
and developed over time in a milieu that often
encompasses decades and generations.
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21 Opinion Matein.indd 21 7/25/11 12:57:13 PM
MB Riussec_RedGold Gulf bus.pdf 1 7/26/11 6:28 PM
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FG@E@FE
COMMENT
Crowing a leader, like a laLher raises a son, is Lhe besL way Lo
psychologically prepare Lhem lor Lhe luLure.
=8K?<I8E;JFE
i
M FREQUENTLY ASKED HOW CAN WE GROW FUTURE
leaders? While giving the keynote address at the Middle East Business
Leaders Summit I was asked again by a seasoned CEO, How do you
build responsibility into future leaders?
Like most leaders, you may have an opinion on how to grow leaders
yet you remain inquisitive about what you could be doing better. So,
lets take a look at this very important topic in a region that is gripped
by a youth bulge.
The answer to this query lies in the heart of Arab tradition where
the father is a paramount figure in the life and development of a son.
He is the symbol of authority and central to guidance by being actively
involved in the sons upbringing. You grow leaders in much the same
way that a father raises a son by taking an active role to ensure that
they are prepared for life.
Arab life is crowded with practical leadership development examples
consider the Majlis where the sons sit among adult men and are
expected to behave like adults, usually not speaking but sitting quietly
at the side listening to the grown-ups conversation. In the Bedouin
tradition, children assume adult responsibilities at an early age
tending goats, collecting firewood and doing household chores. Even
in the more urban environments, fathers bring their sons to the shop
where the boys learn the commercial skills of trade.
A modern day example of a father raising a son and a leader raising
a leader is found in HH Sheikh Mohammed bin Rashid Al Maktoum
preparing his son Sheikh Hamdan to be a leader. Instead of relying
exclusively on the formal education of the UK military academy Sandhurst,
it is very clear that Sheikh Mohammed created an environment for his son
to learn how to lead. Education means more than what takes place in the
formal school setting. While the school meets the academic requirements,
it is the family that instils the value system, social conscience, and the
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practice of daily life. Sheikh Hamdan confesses that his
father is his tutor in life and he continually learns from
him and takes his views as a guiding star regarding
many strategic issues.
So, what can be learned from the practice of raising
a son to helping raise leaders in the corporate world?
Becoming a leader is more than receiving a
promotion and training course. Successful preparation
requires exposure, guidance, opportunity and support.
<OGFJLI< a commonality among successful leaders
is that they were exposed to future challenges
and role requirements long before they held the
leadership role. Unfortunately this usually comes by
happenstance or on rare occasions through a good
mentor. People who move up need role models who
provide a preview of the future reality.
>L@;8E:< This is the active part of growing leaders.
While training programmes are good, they will never
replace the value that comes from a leader guiding a
future leader. Leaders who are serious about growing
others roll up their sleeves and do the hard part of
teaching others to acquire the mindset, skills and
behaviour that is fitting of a leader. Doing so not only
grows future leaders, it makes existing ones better.
FGGFIKLE@KPLike becoming a doctor, leaders only
become such when they lead. So the core component
is providing future leaders with a chance to lead. Start
with a project not a role. Then, after success, increase
the scope of accountability and allow for greater impact.
JLGGFIK Please dont ditch your future leaders
when you promote them. You need to continue to be
their encouragement, coach and a leader they can
learn from as you help them to further improve. This
is not the HR departments job; it is every leaders
privilege and responsibility to cultivate other leaders.
Growing a leader, like a father raising a son, is
a far better approach than the sink or swim or
promotion and training course approach. In addition
to building skill and instilling the correct behaviour,
it psychologically prepares leader for the future
while equipping him/her to take advantage of the
opportunities of the future.
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Dr Tommy Weir, managing
director of the Emerging
Market Leadership Centre,
and author of The CEO Shift
23 Column Weir.indd 23 7/25/11 12:58:28 PM
CULF BUSlNLSS&),
FG@E@FE
COMMENT
K?<AFLIE<P=IFD
JL::<JJKFJ@>E@=@:8E:<
OOD IDEAS ARE COMMON, THE
saying goes. Rare are the people with
the knowledge, network, and discipline
to turn those ideas into meaningful action.
Business schools refine promising ideas and
provide the leadership skills and strategic tools
that create material success. In my view, these schools
also have the responsibility to advance management in ways that make a
significant positive contribution to the world.
One way that management institutions deliver on these goals is
through education designed for seasoned professionals, those with
several years of work experience. Often, these people have some
management background, but they may be seeking knowledge that
lets them really advance in their careers, or even explore new
opportunities in another field. They may desire general management
frameworks or specific, domain-based knowledge targeted to a given
sector, like healthcare or energy. And they may wish to gain this
expertise relatively quickly, while remaining in their jobs where they
can put this information to work right away.
At INSEAD, we believe that this multinational, multicultural, and
multiconnected business world needs leaders with the knowledge and
sensitivity to operate anywhere.
K?<<D98E<KNFIBF==<IJC@=<CFE>
8;M8EK8><JK?IFL>?<EI@:?@E>
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The executive MBA programme is a valuable
strategic asset for leaders who face increased
global market complexity, uncertainty, and
competition. The best EMBA curricula are designed
to amplify the potential of those who have already
enjoyed some professional success and who now
are looking for advanced, up-to-the-minute
knowledge and leadership insights to let them
excel at an even higher level. Whats more, these
programmes give executives the chance to make
an immediate difference at their organisations by
putting ideas into action right away.
While every business school approaches this task
differently, I believe that these are some critical
elements that make for a robust curriculum:
Strong analytical and managerial frameworks
delivered by excellent faculty.
Vigorous collaboration that builds advanced
leadership skills.
Global perspectives gained through course content
and classroom interaction with diverse, talented
peers who come from around the world and across
many industries.
Opportunities for great personal development.
In addition, this education should develop a
leaders ability to anticipate change even when
clear forecasts are difficult to make due to market
complexity. In fact, this complexity means that no
one person, no matter how talented, can see the
entire picture or around every corner. Thats why it
is crucial for leaders to harness the talents of teams
whose members each bring particular expertise to
the organisation. The right EMBA programmes teach
how to achieve this challenging, yet essential, skill.
Other benefits conferred by a top EMBA programme
include membership in a global community of
practitioners and scholars. This network offers
lifelong advantages, through enriching professional
relationships and personal friendships. When this
network is especially strong, with great geographic,
cultural, and professional diversity, the benefits are
also greater as doors open easier.
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LxecuLive MBA programmes oller global knowledge
and perspecLives Lo leL leaders make a broader impacL.
Dipak C. Jain is the dean
of INSEAD international
business school
25 Column Jain.indd 25 7/25/11 1:04:42 PM
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nokia.pdf 6/29/11 3:55:29 PM
CULF BUSlNLSS&),
FG@E@FE
COMMENT
K?<AFLIE<P=IFD
JL::<JJKFJ@>E@=@:8E:<
OOD IDEAS ARE COMMON, THE
saying goes. Rare are the people with
the knowledge, network, and discipline
to turn those ideas into meaningful action.
Business schools refine promising ideas and
provide the leadership skills and strategic tools
that create material success. In my view, these schools
also have the responsibility to advance management in ways that make a
significant positive contribution to the world.
One way that management institutions deliver on these goals is
through education designed for seasoned professionals, those with
several years of work experience. Often, these people have some
management background, but they may be seeking knowledge that
lets them really advance in their careers, or even explore new
opportunities in another field. They may desire general management
frameworks or specific, domain-based knowledge targeted to a given
sector, like healthcare or energy. And they may wish to gain this
expertise relatively quickly, while remaining in their jobs where they
can put this information to work right away.
At INSEAD, we believe that this multinational, multicultural, and
multiconnected business world needs leaders with the knowledge and
sensitivity to operate anywhere.
K?<<D98E<KNFIBF==<IJC@=<CFE>
8;M8EK8><JK?IFL>?<EI@:?@E>
GIF=<JJ@FE8CI<C8K@FEJ?@GJ8E;
G<IJFE8C=I@<E;J?@GJ%N?<EK?@J
E<KNFIB@JJKIFE>#N@K?>I<8K
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8E;GIF=<JJ@FE8C;@M<IJ@KP#
K?<9<E<=@KJ8I<8CJF>I<8K<I8J
;FFIJFG<E<8J@<I%
The executive MBA programme is a valuable
strategic asset for leaders who face increased
global market complexity, uncertainty, and
competition. The best EMBA curricula are designed
to amplify the potential of those who have already
enjoyed some professional success and who now
are looking for advanced, up-to-the-minute
knowledge and leadership insights to let them
excel at an even higher level. Whats more, these
programmes give executives the chance to make
an immediate difference at their organisations by
putting ideas into action right away.
While every business school approaches this task
differently, I believe that these are some critical
elements that make for a robust curriculum:
Strong analytical and managerial frameworks
delivered by excellent faculty.
Vigorous collaboration that builds advanced
leadership skills.
Global perspectives gained through course content
and classroom interaction with diverse, talented
peers who come from around the world and across
many industries.
Opportunities for great personal development.
In addition, this education should develop a
leaders ability to anticipate change even when
clear forecasts are difficult to make due to market
complexity. In fact, this complexity means that no
one person, no matter how talented, can see the
entire picture or around every corner. Thats why it
is crucial for leaders to harness the talents of teams
whose members each bring particular expertise to
the organisation. The right EMBA programmes teach
how to achieve this challenging, yet essential, skill.
Other benefits conferred by a top EMBA programme
include membership in a global community of
practitioners and scholars. This network offers
lifelong advantages, through enriching professional
relationships and personal friendships. When this
network is especially strong, with great geographic,
cultural, and professional diversity, the benefits are
also greater as doors open easier.
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LxecuLive MBA programmes oller global knowledge
and perspecLives Lo leL leaders make a broader impacL.
Dipak C. Jain is the dean
of INSEAD international
business school
25 Column Jain.indd 25 7/25/11 1:04:42 PM
)-&AUCUS1 20
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COMMENT
JKI8K<>@:K?@EB@E>
N@CCD8B<FI9I<8BPFL
e
VERYONE KNOWS STRATEGIC
planning is critical to long-term organisational success. But,
sadly, not all strategic planning turns out to be successful. A strategic
plan is a highly structured, tangible product with specific times for
implementation (usually one to five years) and a very worthy objectives.
The envisioned product is highly touted and initially creates fanfare
within the organisation, but many times the enthusiasm is short lived
and very quickly the strategic plan is left sitting on a shelf collecting
dust. Even with the best intentions, creating and sustaining positive
change is difficult.
Traditionally, strategic plans are designed to create organisational
change. They require communication and advocacy to bring about
the desired results or there is a risk of generating unnecessary fear,
eroding trust and slowing productivity. That is why developing an
organisation filled with strategic thinkers is so critical. While strategic
planning paints the big picture intended to effectively guide an
organisation forward, it is strategic thinking that gives
the organisation its ability to effectively and consistently implement
critical strategic goals. Strategic thinkers are workers, managers and
executives who clearly understand the Strategic Plan and are focused
on turning its goals into reality. They are empowered and encouraged
to identify strengths and weaknesses within the current flow of goods
and services.
Strategic thinking allows your management team to generate
a vibrant and consistent mindset, which spreads throughout the
organisation allowing everyone to more deeply understand the way
JKI8K<>@:K?@EB@E>:I<8K<J8
GFN<I=LCJ<EJ<F=:FDD@KD<EK#
N?@:?@EKLIE;<C@M<IJ8?@>?CP
GFJ@K@M<8E;GIF;L:K@M<NFIB=FI:<
8E;8GIF=@K89C<FI>8E@J8K@FE%
the organisation works. Strategic thinking creates
a living and breathing Strategic Plan and drives
good decision-making.
J<M<E:FE:<GKJF=JKI8K<>@:K?@EB@E>
(% I am a part of a greater whole. I am only
successful when we are all successful.
)% We always keep our focus on the guiding
principles of our organisational mission, vision
and values.
*% Everyone is an equal part of the whole. We value
and desire input from all members of our community.
No one is excluded.
+% Each daily action guides us successfully toward
our overall strategic plan.
,% We agree to put aside personal issues and conflicts
for the successful achievement of our strategic plan.
-% I am committed to be an active participant
throughout this process. As a strategic thinker I
will continually review how my work and behaviour
affects my unit and how my units work and behavior
affects my organisation as a whole.
.% We agree that all feedback and suggestions
will be made with a positive focus on the problem
and not a negative focus on an individual or unit.
Strategic thinking creates a powerful sense of
commitment, which in turn delivers a highly positive and
productive workforce and a profitable organisation.
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1he key Lo organisaLional success lies in insLilling longLerm
vision inLo sLall and creaLing commiLmenL.
John Chappelear, an internationally
recognised expert on leadership and
author of The Daily Six
26 Column Chappelear.indd 26 7/25/11 1:03:26 PM
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karelia.pdf 7/28/11 11:14:54 AM
)/&8L>LJK)'((
PULLINC DUBAI INTC THE BLACK
=@E8E:<
5ince 2009, the emirate has become
synonymous with debt. But 20!2 could
be its chance to extinguish the deIault
demons once and Ior all.
K<OK9PIP8E?8II@JFE
O
N THAT FATEFUL November
weekend, Dubai World broke
its $25 billion promise to investors,
leaving a black stain on the emirates
reputation that lingers nearly two years
later. After several painful restructurings
at government-related entities (GREs),
Dubai is in much better shape, but by
no means out of the woods. Nervousness
has grown over a $26 billion debt pile
that matures next year.
In light of recent Arab Spring events the
UAE has a lot to lose if it allows its strategic
GREs to default, said John Bates, head of
fixed income at UK-based asset manager
Silk Invest. There is no doubt that 2012
will be a crucial year for Dubai Inc.
To avoid default, Dubai GREs can
refinance, rollover or restructure debt; the
chances of full repayment of next years
money owing is highly unlikely, said Bates.
Real estate companies are of
particular concern mainly due to
weak confidence in the local property
market. The ability of the Dubai
government and GREs to pay off its
debt relies heavily on the performance
of the real estate sector.
Bates said restructurings and debt
extensions are the most likely routes
for most entities. In many cases, the
ambitious plans laid out in the early
2000s have been drastically scaled back.
It is interesting to note that in the capital
bond markets debt defaults have been
extremely rare and limited to the real
estate sector. Typically creditors would
rather roll over than face default.
In 2012, the Jebel Ali Free Zone
Authority (JAFZA), DIFC Investments
(DIFCI) and Dubai Holding are the largest
Dubai entities facing debt maturities. In
total they owe $3.75 billion through a
combination of bonds and loans. To meet
these obligations, they may need external
help from the Dubai Financial Support
Fund (DFSF) or be forced to sell assets.
So far the DFSF has used $18.5 billion
to finance Dubai World and Nakheels
Duba|'s recert bord sa|e ||fted
corfderce |r tbe e|rates debtWortb|ress
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28-29 Briefing Finance.indd 28 7/25/11 10:34:08 AM
CULF BUSlNLSS&)0
>::9I@<=@E>
recovery. Last month, Nakheel got the
approval of all its bank creditors to
restructure its debt, as well as to formally
separate as a company from Dubai World.
JAFZA has a $2 billion Islamic bond,
or Sukuk, maturing in November 2012,
but analysts say its chances of repayment
have improved thanks to healthier
projected cash flows.
Ayesha Sabavala, who covers MENA
for the Economist Intelligence Unit,
said: JAFZA gets substantial licence
and other fees from companies, as
well as income from providing various
administrative services to companies
operating in the free zone. JAFZA should
be able to refinance its sukuk.
But others worry that JAFZA lacks
any substantial monetisable assets as
it does not own land forming part of
its facilities. This could pose a problem
when attempting to refinance the entire
Sukuk internally.
Meanwhile, Standard & Poors (S&P)
rates JAFZA at B and DIFCI at B+
on its $1.25 billion Sukuk due in June
2012, both of which carry negative
outlooks. But the ratings agencys
definition of a default is quite strict
and includes any exchange offers or
restructuring that requires reduced
financial terms for investors, such as
lower coupons or longer maturities. In
this narrow sense the two firms face a
good chance of default on their sukuk.
Tommy Trask, credit analyst at
S&P, said: For JAFZA and DIFCI, our
working assumption is a combination
of asset sales, rollover and refinancing
of existing debt and if necessary some
form of government assistance for
DIFCI. Although some form of debt
restructuring cannot be ruled out, it is
not our base case assumption. That said,
yields on their respective bonds have
tightened significantly over the past year,
particularly for DIFCI, suggesting the
debt repayment chances have improved.
The chances of Dubai having to sell its
trophy assets looked less likely recently
as borrowing costs declined, making
it easier to refinance 2012 debt. In
general, market conditions around bond
refinancing improved after the Dubai
governments $500 million sale of dollar
bonds in June lifted confidence. The
move was well received and left some to
speculate that the emirate had regained
some of its former debt-worthiness.
Sabavala said an uplift in tourism,
FDI and financial services has also
improved Dubais outlook, as it
continues to benefit from a safe haven
status amid the social unrest across the
Middle East. She added: The stalwarts
such as Emirates Airlines and DP World
continue to make money and investor
confidence seems to have gradually
returned to the market. Taking all these
factors into account, Dubai will be able
to roll over its debt in 2012 as the risk
of default seems to be negligible.
Its likely that Dubai will use the same
Dubai World and Nakheel template
for any restructurings in 2012, which
is to service the bonds and restructure
the loans. Whether GREs will require
external assistance to deal with the
larger maturities is yet to be seen.
It may be some time until Dubai
regains the complete trust of its long-
suffering investors, but it seems theres
no better place to start than 2012. If
next year is the emirates opportunity
to distance itself from default, then it
should grab it with both hands.
It could be a decision that proves
critical to future prosperity.
@EC@>?KF=I<:<EK8I89JGI@E><M<EKJK?<
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LmiraLes NBD S500m 30//202
Dubai Holding S500m /2/202
Dubai lslamic Bank S750m (Sukuk) 22/3/202
LmiraLes lslamic Bank S350m (Sukuk) 2/6/202
DlFC lnvesLmenLs S.25bn (Sukuk) 3/6/202
JAFZA S2bn (Sukuk) 27//202
28-29 Briefing Finance.indd 29 7/25/11 10:34:08 AM
>LC=9LJ@E<JJ&*(
8M@8K@FE9I@<=@E>
CULF AIP BATTLE5 WITH UNPE5T
5amer Maiali, CEC oI the stateowned
carrier, says he is condent he can
lead the airline into protability
despite the unrest.
T
HE BAHRAIN POLITICAL turmoil
has been a major setback, not only
for its people, but also for its national
carrier, Gulf Air. New boss Samer Majali
was brought on board almost two years
ago to turn around the islands ailing
state airline. The ex-Royal Jordanian
CEO had been streaming Gulf Airs
operations with some success, but
unrest on the island has brought yet
more challenges.
The drop in passengers was
considerable we saw a 25 to 30 per
cent drop. A lot of this was driven by the
travel bans, not just in Bahrain, but also
the region, says Majali. We lost some
traffic because we didnt have the F1. We
98?I8@E
K<OK9PJ8I8?IFJJ8E;8C@:@89LCC<I
also suspended certain elements of
our network at the same time as well.
The CEO says that the unrest has
been painful but it will not permanently
distract from his plan to turn around
the airline within three years.
2011 was the second year of the
strategy plan and we are trying to get
back on track as much as we can. Its
all an issue of perception obviously,
the media has portrayed a worse view
of what has happened in Bahrain and
the region. The faster we can improve
the image of Bahrain and the region to
the rest of the world, the faster we can
recover. And thats basically it, he says.
In the past people used to avoid bad
spots for longer periods but, now, because
theres no particular region on earth
without issues, people are becoming a
bit more blas. They forget more quickly
and return again after the event.
Majali is at home with adversity
having taken on his role at Gulf Air
when the carrier was rumoured to be
losing $1 million a day. He claims the
first year of the turnaround plan was
very successful and told Gulf Business
last year that he had carved out savings
for the airline through streamlining staff,
marketing and planes.
The second year started off on the
right foot, in the terms of the first month
then the events, not only in Bahrain,
but also in the region, happened, so
weve been simply concerned with
continuing our operations as much as
we can, he says.
Gulf Air did not stop a single
flight because of the events or lack of
resources and we are very proud to be
able to continue to connect Bahrain to
the rest of the world throughout the
entire period. Passengers are coming
back in good numbers, and we hope we
can recover very soon from the traffic we
lost in February, March and April.
This year the company has pushed
ahead with ambitious expansion plans,
launching nine routes, including Nairobi,
Kabul, Copenhagen, Geneva and Milan.
It is part of our strategy to increase
our dominance in the region itself and
connect up key markets beyond the
region with Bahrain. Milan is a good
destination for us as its recognised as
one of the business centres of Europe
at heart of industrial northern Italy
and central Europe. In conjunction, we
opened Geneva at the same time to give
Bahrain direct access to Switzerland for
finance and tourism, adds Majali.
We got out of routes that were not
doing anything for us. We invested
heavily in primary and secondary routes
within a three-hour radius of Bahrain.
Our job is to become the regional network
of choice, so that people can travel from
anywhere within the Middle East and
through Bahrain to anywhere else.
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31 Gulf Air.indd 31 7/25/11 10:35:28 AM
*)&8L>LJK)'((
LCNDCN CALLINC
=FI<@>E@EM<JKD<EK
The UK's most glamourous postcodes
are luring Middle East buyers in their
droves Iollowing regional unrest.
K<OK9PIP8E?8II@JFE
Ayre recently arranged the purchase
for a Middle Eastern client of a $11
million property in Knightsbridge.
He said in an unfamiliar climate,
they are always vigilant to guarantee
a good deal.
In the initial meeting I will discuss
with the client the three golden
variables in search: location, budget
and size of apartment or house. Very
often I will work with the client to
agree an initial search area based on
budget and where they like to socialise
in London.
Once I have collated a short list of
suitable properties I will contact the
client to agree a time that we can jointly
view the properties. If the client is not
in the country I may work with their
T
HE NUMBER OF cash-rich Middle
Easterners buying into Londons
glitziest postcodes has gone through the
roof this year. Whether its a divestment
away from the regional unrest or simply
to secure a summer vacation spot, the UK
capital has increasingly become a home
away from home for wealthy Gulf Arabs.
Londons top agents are now working
round the clock to find trophy assets
that meet the long list of demands
of GCC house hunters. Most report
that affluent investors swoop in and
snap up a property without a second
thought for a mortgage. And this year,
good-looking areas such as Belgravia,
Knightsbridge, Mayfair and Chelsea
have seen a spike in demand.
Nicholas Ayre, a buying agent at
London-based property search firm,
Home Fusion, said: Some buyers
will use their houses a few months a
year when its really too hot to be in
the Middle East and others may spend
longer periods of time in the UK.
Some buy for their children to have
a place to live in while they are at
university in the UK. In all cases the
properties need to be what we call lock
up and leave, so good security while
they are unoccupied.
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32-33 Briefing London Calling.indd 32 7/25/11 10:37:24 AM
CULF BUSlNLSS&**
I<8C<JK8K<9I@<=@E>
local representative or send them photos
and videos of the properties I think are of
interest and then get their feedback.
Home Fusion handles the sale of
houses starting at $4,800 per square foot
(psf), with the current London ceiling on
cost per square foot held by number one
Hyde Park, the upmarket complex of flats
in Knightsbridge that launched earlier
this year at, $9,600 psf. This compares to
the typical price of property on Dubais
Palm Jumeriah, which comes in at $176
psf, while in the worlds tallest building,
Burj Khalifa, it averages $630 psf.
Buyers dont want to overpay for a
property, but in many cases if they want
to be in a particular area then they may
have to pay a premium as the number
of properties for sale in some London
locations is very small, said Ayre.
Research by IP Global found that
Middle East buyers now make up 20
per cent of all purchases in Londons
most desirable destinations, a figure
thats been steadily rising over the
past 12 months. Of all UAE real estate
investment, 60 per cent has been in
London, with the remaining 40 per cent
in Asia Pacific.
In its report, the property investment
company said as well as having the
requisite prestige factor, London also
offers an attractive environment in
which to de-risk during the current
period of turbulence in some areas of
the Middle East.
Fundamentally though, analysts
say London benefits from a sound
economic and legal framework that
allows for solid growth in house prices.
Andrew Phillips, regional sales director
at London-based Hamptons International,
said: The reality is that Middle East
investors were the first international UK
investors in the 1970s and have continued
to view prime central London residential
investment as a good long term investment
opportunity. He said Hamptons has
witnessed a rise in investment from GCC
homebuyers in the last six months, mainly
due to the political unrest.
Oil prices can swing at any time
of the year, but its the political unrest
that has encouraged the greater recent
Middle Eastern residential investment
impetus, Phillips added.
Real estate consultants Knight Frank
said in June that prices have risen 34
per cent since their recent post-credit
crunch low in March 2009 and prices
were now at a record high, two per cent
higher than their previous peak
in March 2008.
Prime London property rose 0.9 per
cent in June, contributing to annual
growth of 8.3 per cent. Meanwhile,
Knight Frank revised its forecast for
prime central London price growth from
three per cent to nine per cent this year.
It seems that without a dip in sight,
prime property in Londons swanky
districts will continue to catch the eye
of the upwardly mobile in the Middle
East for the foreseeable future.
I<J<8I:?9P@G>CF98C=FLE;K?8K
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Sales in London's booming residenLial markeL jumped Lo record levels in June
Lhanks Lo a lood ol purchases lrom overseas buyers. According Lo properLy
consulLancy Savills, Lhe second quarLer ol 20 was a record in Lerms ol Lhe
number and aggregaLe value ol sales ol super expensive homes, wiLh 5
sold lor a LoLal ol S2.2 billion. 1he lrm said June proved Lo be parLicularly
lucraLive lor Lhe sale ol homes worLh more Lhan S8 million in Lhe UK capiLal,
wiLh ^5 sales generaLing abouL S800 million.
Overseas invesLors, parLicular lrom Lhe CCC, have been seeking Lo acquire
secure invesLmenLs amid markeL volaLiliLy elsewhere, wiLh properLy analysLs
reporLing LhaL Lhe weakness ol sLerling has also helped spur buying.
CLOLIPFEK?<DFM<
1he band ol super luxury areas
in cenLral London is expanding.
Chelsea, KensingLon,
KnighLsbridge and Belgravia
had LradiLionally occupied sales
ol more Lhan S8 million, buL Savills
has said more now Lhan a Lhird in
Lhis price brackeL occur in SL Johns
Wood, HampsLead, RegenLs Park
and LancasLer CaLe. 1he lrm said
recenLly LhaL iL recorded Lhe lrsL
S8 million sales in Vauxhall and
Lhe Fulham/HammersmiLh border.
Meanwhile, sLalwarL One Hyde
Park, Lhe KnighLsbridge upmarkeL
complex launched earlier Lhis year,
recorded almosL S800 million ol
sales since February, wiLh lour
deals ol abouL S00 million sLruck
since LasLer.
32-33 Briefing London Calling.indd 33 7/25/11 10:37:25 AM
*+&8L>LJK)'((
9I@<=@E>=@E8E:<
BCND5 TPUMP ECUITIE5
D8IB<KJ
Deutsche Bank's regional market
head, 5alman Al KhaliIa, shares his
road map Ior nance in the region.
K<OK9PG<K<IJ?8NJD@K?
D
EUTSCHE BANK HAS a long history
in the Middle East. With a first
transaction for the Istanbul-Baghdad
railway in 1888, the company claims deep
regional roots. In 2005, it made a decision
to increase its presence from representative
to operational status in the region and
200 people are now working locally on its
behalf. With offices in Dubai, Abu Dhabi,
Riyadh, Doha and representative offices in
Cairo and Manama, the European giant is
now firmly established across the region.
Qatar and Bahrains efforts to become
dominant regional financial hubs have
failed. Bahrain is prey to unrest from
its discontented and disenfranchised
Shia majority, while Qatar has decided
to focus on asset management and
insurance after failing to gain traction on
a scale to match Dubais.
Dubai is now a regional hub where
we have 160 people working. We now
trade on MENA markets out of the region.
Deutsche Bank has been actively engaged
in markets throughout the Arab Spring,
despite the volatility in February and
March, says Salman Al Khalifa, the firms
head of MENA markets.
Deutsche Bank started out selling
international products into the region, then
originating and selling local products and
has more recently been active in intra-
regional business, especially stocks. Wed
like to grow and take things forward, he
says of the companys regional derivatives
and e-commerce commitment. Noteworthy
is Deutsche Banks expansion of its trading
operations in both Dubai and Riyadh,
including the setting up of a corporate
treasury coverage team.
The Arab Spring has seen a big drop in
volumes across the board, says Al Khalifa.
Citing Egyptian forex as an example,
Deutsche Bank has seen a more than 50
per cent drop in activity: it used to trade
around $300 500 million in treasury
bills and forex; more recently, this sum
has fallen $100 200 million. Equities are
similarly off trading and index highs.
Deutsche Bank is active in nine MENA
equity markets, particularly Saudi Arabia
and the UAE, covering 60 stocks in its
research, in the regions main sectors
of oil and gas, financials, and others.
We continue to be optimistic on equity
markets. Trading conditions will be
tough. There is tightness in the market.
Our optimism is driven by significant
government spending plans, and GCC
infrastructure [projects] over the next five
to 10 years. High oil prices continue on a
global basis and this will drive government
surpluses and the ability to spend, along
with corporate earnings, says Al Khalifa.
Further, the slump in regional IPOs
has become the single most symptomatic
factor of the decline in equities. Since 2007,
bond issuance has been nearly triple that
of equity offerings, at $141 billion. Bond
issuance peaked when the financial crisis
bit hardest, in 2009, at $44 billion. First
half 2011 issuance has been five times that
of IPOs, at $10 billion and could end up
being a much greater multiple.
Historically, the region has been
extremely reliant on bank debt to fund
government-related activity, entailing
frequent refinancing. This is changing.
Given the right market conditions, Al
Khalifa believes that bond issuance this
year will match 2010, with some $30
billion more to come before years end.
Certainly the current low interest rate
environment is conducive.
In 2010, the last quarter saw more
issuance than the first three put together.
Given the right window, he believes
this will be driven by market conditions
and global investor appetite. Is there a
backlog? Yes there is. Will it [be cleared]
under the right conditions? Yes.
The delay of a decision on whether
to upgrade the UAE and Qatars equity
markets from frontier to emerging within
the MSCI family is further evidence that
international investors will continue to
treat the region gingerly until the full
implications of the Arab Spring are clear.
However, with most of the political action
in North Africa and the Levant, its a safe
bet that the GCC economies will bounce
back from the financial crisis with their
reputations enhanced.
Sa|ar A| Kba||fa, Deutscbe Bar|
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34 Briefing Deutsche Bank Finance.indd 34 7/25/11 10:38:52 AM
Virtuozity villeret - gulf bus.pdf 1 7/26/11 2:49 PM
*-&8L>LJK)'((
9I@<=@E>>::
LCCAL TEEN5 5PLA5H THE CA5H
Middle East kids are some oI the highest spenders in the world, with a growing
appetite Ior branded gadgets, cosmetics and mobile phones.
P
ARENTS IN THE Gulf are raising
a generation of recession-proof
teenagers who are capable of sustaining
astonishing levels of spending through
any crisis, experts say.
Teens in the UAE and Saudi Arabia are
among the most resilient at the malls, with
the 2008 recession and most recent political
instability hardly leaving a scratch on their
credit cards. The extent of consumption
habits was laid bare by a global study from
market researchers AMRB and TRU. It
found an extraordinary pattern of spending
among Emirati teens, who focus on
gadgets, cosmetics and mobile phones.
The research will be music to the ears
of popular consumer brands in the region
that now leave teens almost helpless
against their seductive ad campaigns.
Deepali Bamane, project director
at AMRB, said 75 per cent of Saudis
the expats in the country much more
severely, but in our exercise, we are
referring only to local Emirati teens
hence, the impact of the downturn is
hardly visible.
Egyptian teens, also covered in the
study, spend one fourth ($32 per month)
that of a global teen ($120), and were in
fact the most conservative spenders in
the Middle East.
Egyptians and Saudis had the highest
future spending expectations though,
according to the findings, indicating that
the recent recession had at least had a
stronger psychological impact on Emirati
teens, which is perhaps due to the UAE
economy being much more interlinked
with global business patterns.
Critically though, youngsters are
learning their lavish ways from their
parents, said Sana Toukan, research
manager for the Middle East at
Euromonitor International. The rising
mall-culture where both adults and teens
spend a large proportion of their time
in the mall both to shop and escape the
extreme temperatures in the Gulf region is
pushing teens to be even more excessive
in their spending. Although the UAE is
a less conservative country compared
to Saudi, there are some restrictions on
the local population which explains why
youngsters adopt excessive shopping
habits in an attempt to fill their time.
Toukan added that big spending was a
result of high disposable income and the
status associated with brands, a notion
well-established in the Gulf and the
UAE in particular. The more expensive
the brand or gadget the higher up a
youngster is up the social scale.
Euromonitor International predicts that
teen spending in the UAE and the GCC
as a whole will remain high independent
of the regional unrest.
I<K8@C
K<OK9PIP8E?8II@JFE
between 12 and 19-years-old even plan to
spend more next year, despite uncertainty
about the rumbling unrest across the
Middle East.
They made this brash admission in a
series of face-to-face interviews. The
Saudi teen spends around $56 in a week,
while the UAE teens are the second
highest spenders in the world and spend
$103 in a weekSpending was higher
only among Norwegian teens with $134,
said Bamane.
Constant advertising of big brands
and a predisposition among Gulf
teens towards international names has
accelerated sales, she said.
The impact of the global downturn
was hardly visible on the UAE teen
population, partly because of the federal
governments support for Emiratis.
The downturn would have impacted
I5 per cert of Saud| teers p|ar
to sperd ore rext vear.
36 Briefing Teen Splash.indd 36 7/25/11 1:31:32 PM
*-&8L>LJK)'((
9I@<=@E>>::
LCCAL TEEN5 5PLA5H THE CA5H
Middle East kids are some oI the highest spenders in the world, with a growing
appetite Ior branded gadgets, cosmetics and mobile phones.
P
ARENTS IN THE Gulf are raising
a generation of recession-proof
teenagers who are capable of sustaining
astonishing levels of spending through
any crisis, experts say.
Teens in the UAE and Saudi Arabia are
among the most resilient at the malls, with
the 2008 recession and most recent political
instability hardly leaving a scratch on their
credit cards. The extent of consumption
habits was laid bare by a global study from
market researchers AMRB and TRU. It
found an extraordinary pattern of spending
among Emirati teens, who focus on
gadgets, cosmetics and mobile phones.
The research will be music to the ears
of popular consumer brands in the region
that now leave teens almost helpless
against their seductive ad campaigns.
Deepali Bamane, project director
at AMRB, said 75 per cent of Saudis
the expats in the country much more
severely, but in our exercise, we are
referring only to local Emirati teens
hence, the impact of the downturn is
hardly visible.
Egyptian teens, also covered in the
study, spend one fourth ($32 per month)
that of a global teen ($120), and were in
fact the most conservative spenders in
the Middle East.
Egyptians and Saudis had the highest
future spending expectations though,
according to the findings, indicating that
the recent recession had at least had a
stronger psychological impact on Emirati
teens, which is perhaps due to the UAE
economy being much more interlinked
with global business patterns.
Critically though, youngsters are
learning their lavish ways from their
parents, said Sana Toukan, research
manager for the Middle East at
Euromonitor International. The rising
mall-culture where both adults and teens
spend a large proportion of their time
in the mall both to shop and escape the
extreme temperatures in the Gulf region is
pushing teens to be even more excessive
in their spending. Although the UAE is
a less conservative country compared
to Saudi, there are some restrictions on
the local population which explains why
youngsters adopt excessive shopping
habits in an attempt to fill their time.
Toukan added that big spending was a
result of high disposable income and the
status associated with brands, a notion
well-established in the Gulf and the
UAE in particular. The more expensive
the brand or gadget the higher up a
youngster is up the social scale.
Euromonitor International predicts that
teen spending in the UAE and the GCC
as a whole will remain high independent
of the regional unrest.
I<K8@C
K<OK9PIP8E?8II@JFE
between 12 and 19-years-old even plan to
spend more next year, despite uncertainty
about the rumbling unrest across the
Middle East.
They made this brash admission in a
series of face-to-face interviews. The
Saudi teen spends around $56 in a week,
while the UAE teens are the second
highest spenders in the world and spend
$103 in a weekSpending was higher
only among Norwegian teens with $134,
said Bamane.
Constant advertising of big brands
and a predisposition among Gulf
teens towards international names has
accelerated sales, she said.
The impact of the global downturn
was hardly visible on the UAE teen
population, partly because of the federal
governments support for Emiratis.
The downturn would have impacted
I5 per cert of Saud| teers p|ar
to sperd ore rext vear.
36 Briefing Teen Splash.indd 36 7/25/11 1:31:32 PM
>LC=9LJ@E<JJ&*0
9LJ@E<JJ9I@<=@E>
UNPE5T 5PIKE5 IN5UPANCE CLAIM5
K8B8=LC
Pegional upheaval has highlighted
the need Ior liability insurance.
T
HE ARAB SPRING threw a spanner
in the works for Takaful insurers who
were counting on growth in key markets,
such as Egypt, to help recover from the
recession. However, government spending
in the Gulf, new regulations and an
increased insurance awareness are set to
fuel insurance growth levels.
Governments across all six Gulf states
have increased their budget spending and
social handouts in answer to demands
for economic reforms, while regulatory
authorities in countries such as Saudi
Arabia have introduced compulsory
medical insurance.
In the UAE, the initial public offering
of Islamic insurer Wataniya earlier this
year was oversubscribed at least six
times, pointing to investor interest in this
segment at a time when IPOs have dried
up. Oman, the only Gulf state without an
Islamic bank, authorised the creation of
Islamic financial companies in a bid for
a slice of the growing $1 trillion Islamic
finance industry.
Global Takaful contributions could reach
$25 billion by 2015 if they continue to
grow by 31 per cent annually, according
to Ernst & Young. Saudi Arabia, Malaysia
and the UAE are the top Takaful markets
and the family Takaful segment remains
unpenetrated in the MENA region.
But the political turmoil has already
left its mark on the Takaful industry, with
international insurance companies taking a
step back.
While there are pressures on those
players to find new markets and grow,
there is a concern about the volatility in
the Middle East, said Peter Hodgins, a
partner at law firm Clyde & Co. We had
inquiries from companies that were looking
to relocate their central hub from Bahrain
to Dubai and Qatar.
The regions Takaful and conventional
insurance industry overall suffers from
low penetration rates due to the cultural
suspicion towards the product and lack
of education. But Takaful stands to
gain more customers due to its ethical
aspects: prohibition of investments in
un-Islamic activities such as gambling
and its interest-free form. Regulators
in the Gulf are also trying to limit the
number of Takaful licences and encourage
consolidation to bolster the industry.
In Saudi Arabia, it is becoming quite
clear that the Saudi Arabian Monetary
Agency is encouraging new entrants to the
market to consider acquisitions rather than
apply for new licenses, said Hodgins.
The lack of harmonisation of insurance
laws from country to country - and in
the case of the UAE from emirate to
emirate - regarding medical insurance
is an obstacle to consolidation and the
expansion into new markets.
Another problem facing Takaful
companies is the added cost of having
a Sharia board. Rising competition,
shortage of expertise, and sociopolitical
uncertainty were named as the top three
risks plaguing Takaful companies in a
survey conducted by Ernst & Young.
The shortage of a qualified talent pool
is the number one hurdle that operators
have to plan for, said Ashar Nazim,
MENA head of Islamic financial services,
Ernst & Young. This expertise is scarce
and comes at a premium and there is a
lack of sustained initiative to enlarge this
pool in future.
The lack of a developed regional
Sukuk market and the dearth of long-
term Islamic bonds is another issue.
Takaful companies, like conventional
insurers, need to rely less on income
from investments and focus more on
underwriting profits, whereby they
generate income when contributions
from policyholders exceed claims.
The Arab revolution wave may help in
this regard because an increase in claims
could lead to a growth in contributions,
while the financial crisis and the
subsequent high-level debt defaults
have highlighted the need for liability
insurance, said Hodgins.
In the short-term, the Arab Spring
is creating a lot of liability and that
is not necessarily a bad thing for
insurance companies, because if there
is a volume of claims, premiums will
rise, said Hodgins. Arguably, in the
medium to long-term, the Arab Spring
maybe very beneficial to the extent it
results in regime change that may create
investment opportunities for insurance
and Takaful companies.
K<OK9P;8E@8J88;@
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39 Briefing Takaful.indd 39 7/25/11 10:58:04 AM
C
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samsung.pdf 7/26/11 6:05:41 PM
>LC=9LJ@E<JJ&*0
9LJ@E<JJ9I@<=@E>
UNPE5T 5PIKE5 IN5UPANCE CLAIM5
K8B8=LC
Pegional upheaval has highlighted
the need Ior liability insurance.
T
HE ARAB SPRING threw a spanner
in the works for Takaful insurers who
were counting on growth in key markets,
such as Egypt, to help recover from the
recession. However, government spending
in the Gulf, new regulations and an
increased insurance awareness are set to
fuel insurance growth levels.
Governments across all six Gulf states
have increased their budget spending and
social handouts in answer to demands
for economic reforms, while regulatory
authorities in countries such as Saudi
Arabia have introduced compulsory
medical insurance.
In the UAE, the initial public offering
of Islamic insurer Wataniya earlier this
year was oversubscribed at least six
times, pointing to investor interest in this
segment at a time when IPOs have dried
up. Oman, the only Gulf state without an
Islamic bank, authorised the creation of
Islamic financial companies in a bid for
a slice of the growing $1 trillion Islamic
finance industry.
Global Takaful contributions could reach
$25 billion by 2015 if they continue to
grow by 31 per cent annually, according
to Ernst & Young. Saudi Arabia, Malaysia
and the UAE are the top Takaful markets
and the family Takaful segment remains
unpenetrated in the MENA region.
But the political turmoil has already
left its mark on the Takaful industry, with
international insurance companies taking a
step back.
While there are pressures on those
players to find new markets and grow,
there is a concern about the volatility in
the Middle East, said Peter Hodgins, a
partner at law firm Clyde & Co. We had
inquiries from companies that were looking
to relocate their central hub from Bahrain
to Dubai and Qatar.
The regions Takaful and conventional
insurance industry overall suffers from
low penetration rates due to the cultural
suspicion towards the product and lack
of education. But Takaful stands to
gain more customers due to its ethical
aspects: prohibition of investments in
un-Islamic activities such as gambling
and its interest-free form. Regulators
in the Gulf are also trying to limit the
number of Takaful licences and encourage
consolidation to bolster the industry.
In Saudi Arabia, it is becoming quite
clear that the Saudi Arabian Monetary
Agency is encouraging new entrants to the
market to consider acquisitions rather than
apply for new licenses, said Hodgins.
The lack of harmonisation of insurance
laws from country to country - and in
the case of the UAE from emirate to
emirate - regarding medical insurance
is an obstacle to consolidation and the
expansion into new markets.
Another problem facing Takaful
companies is the added cost of having
a Sharia board. Rising competition,
shortage of expertise, and sociopolitical
uncertainty were named as the top three
risks plaguing Takaful companies in a
survey conducted by Ernst & Young.
The shortage of a qualified talent pool
is the number one hurdle that operators
have to plan for, said Ashar Nazim,
MENA head of Islamic financial services,
Ernst & Young. This expertise is scarce
and comes at a premium and there is a
lack of sustained initiative to enlarge this
pool in future.
The lack of a developed regional
Sukuk market and the dearth of long-
term Islamic bonds is another issue.
Takaful companies, like conventional
insurers, need to rely less on income
from investments and focus more on
underwriting profits, whereby they
generate income when contributions
from policyholders exceed claims.
The Arab revolution wave may help in
this regard because an increase in claims
could lead to a growth in contributions,
while the financial crisis and the
subsequent high-level debt defaults
have highlighted the need for liability
insurance, said Hodgins.
In the short-term, the Arab Spring
is creating a lot of liability and that
is not necessarily a bad thing for
insurance companies, because if there
is a volume of claims, premiums will
rise, said Hodgins. Arguably, in the
medium to long-term, the Arab Spring
maybe very beneficial to the extent it
results in regime change that may create
investment opportunities for insurance
and Takaful companies.
K<OK9P;8E@8J88;@
>
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K
K
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@
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>
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39 Briefing Takaful.indd 39 7/25/11 10:58:04 AM
Unanimously the best bank in Lebanon.
www.banqueaudi.com
Awards 20.6x27.indd 1 7/25/11 3:22 PM
>LC=9LJ@E<JJ&+(
D<E89I@<=@E>
JCB5 FCP THE YCUTH
LE<DGCFPD<EK
Arab nations are Iaced with mass youth
unemployment and Iast strategies must
be employed to avert a regionwide
timebomb.
K<OK9PJ898??8@;<I
W
IDESPREAD YOUTH unemployment
in the MENA region has been one
of the key catalysts of uprisings across
the Arab world this year.
In April, global business consultancy
McKinsey released a report that said the
Arab worlds future prosperity depends
on its youth. Citing figures indicating that
more than a quarter of the MENA regions
youth are unemployed, McKinsey stated:
So far, the regions governments havent
focused sufficiently on a vital component
of the employment picture: how to ensure
that the regions young people have the
right skills for the jobs being created.
There is wide recognition that if
nothing is done, unemployment levels
are likely to rise further as a result of a
demographic bubble: about one-third
of the population is below age 15. As a
result, millions of young people will
enter the regions workforce over the
next 10 years.
Improving qualifications and skills
among nationals is a must to address the
unemployment issue and bring locals into
the private sector despite the fact that
widespread statistics indicate the vast
majority of GCC nationals (particularly in
the UAE and KSA) prefer government jobs.
In March, the chairman of the Young
Arab Leaders UAE Chapter, Sultan Sooud
Al Qassemi, quoted research indicating
61 per cent of Emirati youth in the UAE
prefer to work in the government sector
as being disastrous, because pumping
that many new government jobs into the
country simply isnt feasible.
According to Anil Khurana, Dubai
director of business consulting firm
PRTM, approximately half of youth
unemployment in the KSA is structural
unemployment meaning that there are
simply not enough jobs, independent
of capabilities or education. This exists
around the world, including the US, but
the number is higher in Saudi Arabia.
Khurana adds: The KSA needs to
create three to four million jobs in the
next 10 years, of which 60 per cent will
need to be in the private sector. This
means 25 per cent more jobs than today,
and this can only happen if there is
dramatic job creation in a job-intensive
segment such as manufacturing
international benchmarks suggest that
every manufacturing job typically results
in almost as many indirect jobs.
According to McKinsey: Demand for
private-sector involvement is substantial,
but supply is limited. Vocational education
and training, private universities, and
work-readiness programmes are the
major categories of private investment
opportunities, but several critical enablers
of private participation are missing, such
as rigorous standards to ensure students
are taught the right skills.
Rabea Ataya, CEO of MENA careers
and jobs website, Bayt.com says: Rising
unemployment in the GCC today is set
against a background of a still lethargic
global economy and similar rising
unemployment trends elsewhere across
the MENA region.
The questions are: how prepared
and flexible is this talent pool for
the requirements and rigours of the
current workplace? How quickly are
regional institutions willing and able to
accommodate this talent pool, to invest in
their training, growth and development,
and to implement policies to properly
engage and retain them?
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Briefing MENA.indd 41 7/25/11 10:38:34 AM
>LC=9LJ@E<JJ&+*
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K5A'5 MANUFACTUPINC DPIVE
@E;LJKI@<J
The Kingdom is becoming more
privatisationIriendly, industrialised
and green, according to management
consultants PTPM.
K
SAS SPENDING SPREE was directly
ignited by the spreading regional
unrest after the fall of Hosni Mobaraks
age-old regime in February. The Saudi
King announced billions of dollars of
spending addressing areas of social and
economic need that had been largely
neglected or avoided until the spending
was announced. This includes stimulating
the private sector through incentives,
investing billions into infrastructure, and
addressing widespread housing shortages
and unemployment among nationals
25 per cent among youth between the
ages of 18 and 30 through various
initiatives such as the announcement
of half a million new homes to be built
and. Companies have also been cornered
into hiring Saudis as part of a heavily
monitored Saudisation programme.
PRTM provides clients in KSA with
strategic advice for promoting industrial
development in the region, as regional
governments increasingly work to promote
private sector investment in growth
sectors. Anil Khurana, lead director of
PRTM, Middle East, says change in the
KSA right now is driven by the economic
demands of the country, the need for
employment. There is the realisation that
if they dont do it now its a major issue
economic development perspective.
The second is the realisation that
oil will run out over the next few
decades. In addition, growing demand
and opportunities also mean the private
sector sees industrial manufacturing
opportunities as profitable, adds Khurana.
Khurana and PRTMs principal associate
partner Masood Hassan have identified six
key trends seen over the past 18 months
in KSA: the generation of wealth through
developing manufacturing capability;
an upfront level of investment in the
innovation process and research and
development; a value-chain approach;
more women in manufacturing; private
partnerships; and being green and
focusing on sustainability.
Masood explains Historically
manufacturing was seen as a second-rate
activity, but has increased in importance
as the oil and gas sector, which accounts
for the bulk of the Kingdoms industrial
sector, is heavily technology intensive
compared to the small and medium-sized
manufacturing enterprises that are more
manpower reliant.
Some examples of economic focus
sectors include automotive, new energy
(solar, biofuels), medical devices, and
pharmaceutical. Acknowledging that
innovation and research and development
are key pillars of a knowledge economy
is whats driving investment in this area.
Khurana and Masood explain the idea
behind building a complete value chain
in an industry is to create a collection of
suppliers and service providers. This is
one way that has led to an increase in
public and private partnerships.
There has been a two to 11 per cent
in increase in Saudi women in the
manufacturing sector over the past five
years, says Masood. One way companies
are leveraging women into their
companies is by creating separate facilities
for men and women, separate entry and
exit gates, and bussing the women into
work. In buildings where men and women
both work, they are separated by a wall.
In past five years this has become more
common, says Masood.
This can also be identified as a
substantive effort in the Kingdoms
Saudisation programme. Masood explains:
The whole idea of Saudisation is the
transfer of technologies, capabilities and
skills, so that the Saudis can stand on their
own feet.
Finally, an increased environmental
awareness is being realised by
companies who see being green as a
way to be competitive beyond simply
reducing costs in the traditional sense by
reducing overheads and materials costs.
Being green and sustainability both offer
cost advantages.
There is recognition that Saudi
companies can be globally competitive,
says Masood, which is combined with
what he describes as, an emerging
mindset among the younger generation
which is more educated and exposed
to global practices that new and
innovative ideas need to be tried
and implemented.
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J8L;@8I89@89I@<=@E>
K5A'5 MANUFACTUPINC DPIVE
@E;LJKI@<J
The Kingdom is becoming more
privatisationIriendly, industrialised
and green, according to management
consultants PTPM.
K
SAS SPENDING SPREE was directly
ignited by the spreading regional
unrest after the fall of Hosni Mobaraks
age-old regime in February. The Saudi
King announced billions of dollars of
spending addressing areas of social and
economic need that had been largely
neglected or avoided until the spending
was announced. This includes stimulating
the private sector through incentives,
investing billions into infrastructure, and
addressing widespread housing shortages
and unemployment among nationals
25 per cent among youth between the
ages of 18 and 30 through various
initiatives such as the announcement
of half a million new homes to be built
and. Companies have also been cornered
into hiring Saudis as part of a heavily
monitored Saudisation programme.
PRTM provides clients in KSA with
strategic advice for promoting industrial
development in the region, as regional
governments increasingly work to promote
private sector investment in growth
sectors. Anil Khurana, lead director of
PRTM, Middle East, says change in the
KSA right now is driven by the economic
demands of the country, the need for
employment. There is the realisation that
if they dont do it now its a major issue
economic development perspective.
The second is the realisation that
oil will run out over the next few
decades. In addition, growing demand
and opportunities also mean the private
sector sees industrial manufacturing
opportunities as profitable, adds Khurana.
Khurana and PRTMs principal associate
partner Masood Hassan have identified six
key trends seen over the past 18 months
in KSA: the generation of wealth through
developing manufacturing capability;
an upfront level of investment in the
innovation process and research and
development; a value-chain approach;
more women in manufacturing; private
partnerships; and being green and
focusing on sustainability.
Masood explains Historically
manufacturing was seen as a second-rate
activity, but has increased in importance
as the oil and gas sector, which accounts
for the bulk of the Kingdoms industrial
sector, is heavily technology intensive
compared to the small and medium-sized
manufacturing enterprises that are more
manpower reliant.
Some examples of economic focus
sectors include automotive, new energy
(solar, biofuels), medical devices, and
pharmaceutical. Acknowledging that
innovation and research and development
are key pillars of a knowledge economy
is whats driving investment in this area.
Khurana and Masood explain the idea
behind building a complete value chain
in an industry is to create a collection of
suppliers and service providers. This is
one way that has led to an increase in
public and private partnerships.
There has been a two to 11 per cent
in increase in Saudi women in the
manufacturing sector over the past five
years, says Masood. One way companies
are leveraging women into their
companies is by creating separate facilities
for men and women, separate entry and
exit gates, and bussing the women into
work. In buildings where men and women
both work, they are separated by a wall.
In past five years this has become more
common, says Masood.
This can also be identified as a
substantive effort in the Kingdoms
Saudisation programme. Masood explains:
The whole idea of Saudisation is the
transfer of technologies, capabilities and
skills, so that the Saudis can stand on their
own feet.
Finally, an increased environmental
awareness is being realised by
companies who see being green as a
way to be competitive beyond simply
reducing costs in the traditional sense by
reducing overheads and materials costs.
Being green and sustainability both offer
cost advantages.
There is recognition that Saudi
companies can be globally competitive,
says Masood, which is combined with
what he describes as, an emerging
mindset among the younger generation
which is more educated and exposed
to global practices that new and
innovative ideas need to be tried
and implemented.
>
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44-48 Damas.indd 45 7/27/11 4:33:03 PM
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nan Fakhreddin is tense. His wide
eyes are the mark of a man who
has been handed one of the
UAEs most difficult challenges:
turning around the fortunes
of Damas International, the
Middle Easts largest and
most beleaguered jeweller
by equal measure.
When the CEO joined
the firm from The World Gold Council
16 months ago, Damas was mired in
the biggest scandal to hit a UAE-listed
company to date. The firms three
Abdullah brothers were convicted by
the Dubai Financial Standards Authority
(DFSA) of withdrawing some $167 million
in unauthorised transactions from the
century-old family company having
effectively used public funds as a personal
bank account, for everything from petrol
receipts to real estate purchases.
The DFSA ordered the brothers to pay
suspended fines totalling Dhs11 million,
asked Damas to dissolve its board, and
banned the Abdullahs from residing on
any board for up to 10 years.
Ill be very honest with you, its been
difficult. The amount of work in the first
few months was unbelievable, says
Fakhreddin, speaking from the firms new
and gleaming headquarters in Dubais
Jumeirah Lake Towers a symbolic world
away from the historic but dusty confines
of the familys former office in Deiras
Gold Souk. There was a vacuum of
power before the new board was put in
place and, yes, we were firefighting.
There were many fires: the firms
plummeting share price, which, at
10 cents, is still 90 per cent less than
the IPO price; international luxury
jewellery brands were fleeing Damas
representation; and the company owed
$872 million to around 25 banks,
including French behemoths BNP Paribas
and Credit Agricole.
One of Fakhreddins biggest
achievements to date is clawing in a
six-month profit for the first half of last
year. Damas reported a net profit of
Dhs4.24 million ($1.15 million), a major
turnaround from the same period in
2009, when the retailer posted a loss of
Dhs713.3 million ($194.21 million). The
CEO has also successfully brokered a
deal with the firms sea of lenders to pay
back its debt over a six-year period.
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Weve recently paid back Dhs200
million as a scheduled repayment
under the financial restructuring, says
Fakhreddin. The banks approved our
business model and they have full
confidence in our ability to repay the
excess debt. Theres no haircut, they are
getting 100 per cent on the dollar, and they
get full interest. They are getting all of that
from the proceeds of our operations, we
are not liquidating our assets and we are
not adjusting the structure of the company
to repay the banks.
Then theres the reclaiming of the
debt owed to Damas and the banks by
the brothers, which has been signed as
a cascade repayment. The Abdullahs
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44-48 Damas.indd 46 7/27/11 4:33:07 PM
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around. There was a time when we were
losing talent on a daily basis because
there was a sinking ship mentality,
he says. We want to get back to core
business. We need to maximise sales
year-on-year so that we have more
money to pay back to the banks.
The CEO adds that the soaring
gold price, which has just pipped
the unprecedented $1,600-an-ounce
mark, is unlikely to affect sales in
assets, which lie largely in real estate,
will be divested to pay back the debt
over three years.
The brothers owe Dhs640 million to
us. The point of the repayment period is
that, if you look at the whole portfolio that
the brothers have, the fire-selling of these
assets is not realistic and will not serve the
purpose of anyone, the CEO says.
We decided we will sell these assets
in a gradual manner so that we recover
the full market value without having to
minimise the prices and the proceeds
will be distributed to all lenders in a
cascade manner. We have sold a few
assets and, on average, we are getting
around 20 30 per cent more than the
valuations at the peak of the crisis.
The painstakingness of the agreements,
both with the banks and the brothers,
is not to be underestimated. The
negotiations were complex because of
criss-crossing of guarantees, varying
ownership structures and a mix of secured
and unsecured debt arrangements.
Most of the family-owned businesses
globally they are not famous for their
corporate governance or documentation,
says Fakhreddin. We inherited a
situation where a lot of our money was
in the hands of overseas partnerships
and JVCs. There were even retail
partners and JVCs in the UAE without
the proper documentation.
After their dramatic acquittal, Damas
controversially brought back the founding
brothers as senior advisors to the
company leading to media cries that
the DFSA had no teeth. But Fakhreddin
defends the decision.
Bringing the brothers back was the
only method we had for recovery. We
had to create a proper plan and pursue
this money using the help of the previous
directors this is their biggest input to
the company now.
Aside from recovery, the CEOs biggest
challenge has been keeping up morale in
the company and hiring new talent with
the aim of getting back to the companys
core proposition: selling quality jewellery.
It was a big task to turn the culture
his core markets because its the
perception of the upward price
direction that spurs sales, particularly
in KSA and the Asian markets.
Damas, which now has more than 300
stores in 11 countries, has launched more
than 100 new product designs in the last
year, along with more than 59 company
promotions. In a bid to streamline its
operations, the CEO has acquired full
ownership of Damas in Kuwait and Saudi
Arabia, two of the firms core markets,
and sluiced off smaller operations
and joint ventures in the UAE and
internationally. For now, Fakhreddins
steely focus is fixed on cleaning up and
maximising GCC operations.
Damas was in 14 overseas markets
when I took over and the first thing we
did was develop a country evaluation
strategy. There are markets where the
industry is thriving but, unfortunately,
the business conduct is designed in
a way where corporate governance
compliance is not possible, says
Fakhreddin. Saudi Arabia is the fourth
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44-48 Damas.indd 47 7/27/11 4:33:10 PM
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largest jewellery market in the world. We
have started already on improving our
penetration, profitability and compliance
there and I can tell you that we have
succeeded on all three counts.
In the next 12 to 18 months, KSA and
Kuwait are both pitted to contribute
larger shares to company revenue than
they do currently. In the short-term, the
CEO will also be focusing on sales in the
UAE, which currently account for around
78 per cent of the firms business.
Previous plans to open 100 stores in
India have been waylaid for the time
being, but the company will widen its
focus to India, Turkey and Egypt within
a three to five year timeframe.
I am hoping to achieve a solid
brand that is recognised internationally
with presence in many countries on a
franchising basis the future of Damas
lies in the franchising model. This is
completely different to the expansion
model that was followed in the past.
We were directly in markets that we
didnt have too much experience in and
we spilled our resources outside the
UAE. We will not allow that to happen
again. By the end of 2011 or early 2012,
we will be piloting the franchising
model overseas. The pilot will be
Mediterranean-based and the outcome
will help us decide on the next moves.
Fakhreddin says.
While Damas is unequivocally moving
in a more positive direction under the
new CEOs shrewd stewardship, the
company remains under the watchful
eye of the DFSA. Having been ordered
to dispense of its board last year, Damas
now runs the most active set of corporate
governance initiatives on the bourse. The
firm now has the chairman, the CEO, six
independent non-executive directors, and
one non-executive director on the board
a marked change from the nepotistic
post-IPO days of 2008.
Damas completed its turnaround in
terms of corporate governance and this
was a big priority. We need to admit
that this was the cause behind most of
the issues that weve faced in the last
two years. Corporate governance was
not only an issue for our relationship
with the market, or the media, or even
the regulators, it was a survival issue,
Fakhreddin says.
We had to change the culture within
the company from a family-one to a
listed-one. We reviewed every procedure
to ensure that corporate governance
is always being obeyed, whether its a
small deal or a $1 billion deal. What
happened two years ago it would be
impossible for it to happen again. We
deserve a second chance. I think weve
secured that.
Its very difficult to speculate on
when and if the brothers will come back
and what form Damas will have then.
But Damas has crossed a bridge when
it comes to being a family company, we
have gone beyond that.
The CEOs next big test is the Damas
full-year 2010 results, which were
pending release as Gulf Business went
to press. But theres a trace of a smile
and some respite in his wired posture
when the CEO says he cant talk about
the new figures just yet. In the world of
Fakhreddin, its not a matter of whether
he will succeed in reversing the fortunes
of Damas but when.
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44-48 Damas.indd 48 7/27/11 4:33:12 PM
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@
ndustry heavyweights say the
battle to service regional bank
assets is likely to be bloody as
Saudi Arabia rolls out a public
spending spree and other GCC
states are potentially upgraded to
emerging status in December.
Many banks saw declines in their
custody business in the first of half
of 2011 amid unrest in the Middle
East. News of the market expansion
has spread quickly and the likes of
Northern Trust, Bank of New York
Mellon (BNY Mellon) and Standard
Chartered are all scaling-up their
operations. They will also be keen
to smash the dominance of HSBC,
which has controlled the Middle East
market for over a decade and last year
reported it held around $40 billion of
local assets.
HSBC is the only Western custodian
bank to have a foothold, and personnel,
in each of the main GCC markets. Most
rivals tend to export servicing of Middle
Eastern client assets to offshore centres
outside the region.
As public spending picks up, so will
trade finance and import and export
between countries in the region, said
Tarek Elrefai, senior executive office
in Dubai and head of global client
management at BNY Mellon. This will
likely have a positive knock-on effect
for bond issuance and global deposit
receipts, which allow foreign investors to
invest and be publicly traded in the Gulf.
In other words, each part of our business
will be in demand.
BNY Mellon is the worlds largest
custodian and has five bases in the
Middle East - Dubai and Abu Dhabi in
the UAE, Beirut, Cairo and Istanbul. For
the moment all client assets it safeguards
and services are held with local sub-
custodians in the region and processed
in BNY Mellons global centres.
Elrefai said to meet the upcoming
spike in demand the bank is planning
to buy out a local custodian, although
this is unlikely to be completed until
2012. We see good opportunities in the
Gulf region in line with our business
model, and are looking at perfect
timing, prices and resources to move
forward. We expect the local custody
market and debt market to develop
and we hope to have the capabilities to
serve these two markets as they develop
domestically, he said.
In May, Standard Chartered launched
a new service based in Dubai, to offer
its Middle Eastern clients a portal to
access global markets. This followed
JP Morgans decision a month before
to open a regional hub in Qatar to
offer a range of banking services
including custody.
Meanwhile, HSBC, which declined
to comment for this article, announced
that its Saudi Arabian wholesale and
investment banking unit, HSBC Saudi
Arabia, would merge with SABB Securities,
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50-53 Custodians.indd 50 7/27/11 3:22:08 PM
@
ndustry heavyweights say the
battle to service regional bank
assets is likely to be bloody as
Saudi Arabia rolls out a public
spending spree and other GCC
states are potentially upgraded to
emerging status in December.
Many banks saw declines in their
custody business in the first of half
of 2011 amid unrest in the Middle
East. News of the market expansion
has spread quickly and the likes of
Northern Trust, Bank of New York
Mellon (BNY Mellon) and Standard
Chartered are all scaling-up their
operations. They will also be keen
to smash the dominance of HSBC,
which has controlled the Middle East
market for over a decade and last year
reported it held around $40 billion of
local assets.
HSBC is the only Western custodian
bank to have a foothold, and personnel,
in each of the main GCC markets. Most
rivals tend to export servicing of Middle
Eastern client assets to offshore centres
outside the region.
As public spending picks up, so will
trade finance and import and export
between countries in the region, said
Tarek Elrefai, senior executive office
in Dubai and head of global client
management at BNY Mellon. This will
likely have a positive knock-on effect
for bond issuance and global deposit
receipts, which allow foreign investors to
invest and be publicly traded in the Gulf.
In other words, each part of our business
will be in demand.
BNY Mellon is the worlds largest
custodian and has five bases in the
Middle East - Dubai and Abu Dhabi in
the UAE, Beirut, Cairo and Istanbul. For
the moment all client assets it safeguards
and services are held with local sub-
custodians in the region and processed
in BNY Mellons global centres.
Elrefai said to meet the upcoming
spike in demand the bank is planning
to buy out a local custodian, although
this is unlikely to be completed until
2012. We see good opportunities in the
Gulf region in line with our business
model, and are looking at perfect
timing, prices and resources to move
forward. We expect the local custody
market and debt market to develop
and we hope to have the capabilities to
serve these two markets as they develop
domestically, he said.
In May, Standard Chartered launched
a new service based in Dubai, to offer
its Middle Eastern clients a portal to
access global markets. This followed
JP Morgans decision a month before
to open a regional hub in Qatar to
offer a range of banking services
including custody.
Meanwhile, HSBC, which declined
to comment for this article, announced
that its Saudi Arabian wholesale and
investment banking unit, HSBC Saudi
Arabia, would merge with SABB Securities,
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a wholly-owned brokerage and custody
business unit of The Saudi British Bank.
State Street has had a presence in the
Middle East through its Dubai office for 18
years and last March it opened a second in
Qatar. From these bases it targets markets
around the GCC and North Africa with its
custody and global asset-servicing products.
Like many global custodians, State Street
uses a sub-custodian to access local
markets. This reflects the global practice of
employing local custodians in all but three
markets where it has a presence.
Northern Trust bought Bank of Ireland
Securities Services (BOISS) in June for
$82 million, a move that the Chicago-
based bank hopes will expand its custody
client list in the Middle East. BOISS, the
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largest Irish-owned asset administration
provider, has a footprint in the fledgling
exchange-traded funds (ETFs) space in
the region.
Michael Slater, from Northern Trusts
Middle East headquarters in Abu Dhabi,
said: We currently have 25 clients but
theres some really interesting scope
for expansion given the infrastructure
within the BOISS business. Were not
going to increase by a dozen clients,
but it may we may target around six
in the ETF space. Part of the higher
demand for ETFs has been the increasing
sophistication of investors in the Middle
East and the influx of CIOs and CFOs
from Europe and the US.
Northern Trust has four staff in Abu
Dhabi and 15 on our virtual team, which
provides support and extra expertise
through regular visits to the region. Slater
said head count in the Middle East is
likely to increase by the end of this year
to meet demand. The best way to treat a
client is to be close to them, which means
new branches.
Although the region is working to bring
its participants operations in line with
global practices, Middle Eastern investors
have been viewed as a lucrative market by
custodians due to the high concentration
of sovereign wealth funds that invest both
in home and global markets.
In particular, Saudi Arabias public
spending drive, which started in February
with the announcement of a package
worth around $36 billion, is being seen by
many as a major windfall for custodians.
With fears of instability growing in the
region, and with an eye on the unraveling
unrest in neighbouring Bahrain, Saudis
King Abdullah subsequently pledged a extra
programme of $130 billion in spending.
Meanwhile, Gulf states are waiting for
a decision over their entry to the MSCI
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year, which could reinvigorate local stock
markets and boost foreign fund flow. An
upgrade would definitely lift the profile
of the markets and improve visibility,
boosting benchmarked foreign inflows,
analysts say.
Mike Cowley, head product and
client management for Mena at
Deutsche Bank, said: The MSCI
decision in December could have
a major knock-on effect for us and
custodians in general. It will mean
emerging market traders will have to
start tracking the local indices, so you
will likely have more accounts and
funds opened. Overall, volumes and
liquidity rises, so everyone wins, from
brokers through to custodians.
Deutsche Bank, which launched its
custody business in the UAE in late 2008
with Deutsche Securities and Services,
has seen volumes across the region
drop in the wake of the Arab Spring
movement. As a result, head count at
its Abu Dhabi, Dubai, Saudi and Qatar
offices, remains in neutral mode this
year, said Cowley. The firm currently
employs seven client service and more
than 10 operational staff dedicated to
custody in the region.
Saudi Arabia is the key to developing
your custody business in the region
over time. Hiring the right people and
establishing the right set up will be vital
to success there. This is not to
say that Saudi will happen in 2012
or 2013, but were building the relevant
systems and resources for when it
does, said Cowley.
In the event of a spike in activity over
the coming 12 months, Deutsche will
parachute in staff from various offices
around the world for up to six months
to meet demand, added Cowley.
As global custodian banks build up
critical mass either through valued-added
services or local acquisitions in the Middle
East, the competition for business will
only intensify from here on out. Most
participants in the market agree that after
six months of unrest, what is needed is a
prolonged period of political stability, which
would re-ignite investment and accelerate
the contest for custody even further.
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he costs of the turmoil that overthrew Hosni Mubarak
have still to be counted in economic as well as political terms.
Outwardly Cairo is as busy as ever. But with hotels lucky
if they can fill a third of their rooms, unfinished housing
projects and newly built apartment blocks lying empty,
arguments that things are back to normal are unconvincing.
Even if there is a smooth transition of power to a civil
administration, after elections for a new parliament and
president are held in autumn, huge uncertainties will remain.
Street protests over the release of police said to have killed
demonstrators in January illustrates that public anger remains
a kinetic force in Egyptian society.
Whoever takes over in the country faces a grim reality. Egypts
poverty rate is approaching 70 per cent. Remittances, another
vital source of foreign exchange, are also
falling due to returning Egyptian workers
from Libya.
Osama Saleh, chairman of Egypts
General Authority for Investment (GAFI),
expects foreign direct investments to fall
more than 40 per cent in 2011. Before
the ousting of former president Mubarak,
FDI was expected to total $7 billion.
Analysts say this could now be reduced
to $3.5 billion and even this level may be
very optimistic and depends on drawing in
substantial Gulf money as well as support
from the major industrial countries.
54-57 Egypt.indd 54 7/27/11 4:36:57 PM
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he costs of the turmoil that overthrew Hosni Mubarak
have still to be counted in economic as well as political terms.
Outwardly Cairo is as busy as ever. But with hotels lucky
if they can fill a third of their rooms, unfinished housing
projects and newly built apartment blocks lying empty,
arguments that things are back to normal are unconvincing.
Even if there is a smooth transition of power to a civil
administration, after elections for a new parliament and
president are held in autumn, huge uncertainties will remain.
Street protests over the release of police said to have killed
demonstrators in January illustrates that public anger remains
a kinetic force in Egyptian society.
Whoever takes over in the country faces a grim reality. Egypts
poverty rate is approaching 70 per cent. Remittances, another
vital source of foreign exchange, are also
falling due to returning Egyptian workers
from Libya.
Osama Saleh, chairman of Egypts
General Authority for Investment (GAFI),
expects foreign direct investments to fall
more than 40 per cent in 2011. Before
the ousting of former president Mubarak,
FDI was expected to total $7 billion.
Analysts say this could now be reduced
to $3.5 billion and even this level may be
very optimistic and depends on drawing in
substantial Gulf money as well as support
from the major industrial countries.
54-57 Egypt.indd 54 7/27/11 4:36:57 PM
CULF BUSlNLSS&,,
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WiLh conLinued CCC supporL and loreign invesLmenL, LgypL could yeL prosper
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At the G8 summit in June an
ambitious assistance programme was
laid out for Egypt with conventional
wisdom stating the country is too large
and important to allow it to become a
failed state. However, Egypt is joining
a number of other countries, including
economies in Europe, on a global
roulette wheel waiting to be backed
with hard cash. As a result the interim
government is working hard to drum
up support, especially in the region.
The London Financial Times
estimates that the overall regional
investment figure in Egypt over the last
decade stands at nearly $130 billion
with the Gulf states accounting for 50
per cent. More conservative estimates
put the figure at about half this
amount and accounting for around 16
per cent. Whatever the reality the GCC
seems increasingly likely to underpin
the Egyptian economy.
Finance Minister Samir Radwan
recently declared that Egypt has
dropped plans to seek previously
agreed IMF and World Bank loans
and would cover the greater part of its
deficit from local sources as well as
packages from Gulf Arab states such as
Saudi Arabia and Qatar which he said
had already gifted Egypt $500 million.
According to the head of the Egyptian
stock exchange, Mohammed Abdel
Salam Arab, investment in Egyptian
stocks now make up 40-45 per cent of
the total compared to 30-35 per cent
before the overthrow of the Mubarak
regime. Overall Kuwaiti investments in
Egypt reportedly accounts for around
$15 billion. National Bank of Kuwait
has about eight per cent of its assets
exposed to Egypt.
As well as a focus on real estate
and hotels a large number of Saudi
investors are involved in Egyptian food
and agriculture, including the Savola
Group and Almarai which has almost
half the Egyptian dairy market while
Kingdom Holding is seeking to develop
agricultural land in the Nile Valley.
Contractor Saudi Binladen Group
is also active in Egyptian projects.
Al-Zamil Industrial Company derives
7.6 per cent of its sales from its
Egyptian unit in 6 October City.
There are nearly 500 UAE companies
with investments totalling some $10
billion in Egypt. Among these the largest
is Emaar, the largest foreign direct
investor in Egyptian real estate with
projects valued at $5.8 billion. Morgan
Stanley estimates that Egypt accounts for
about one fifth of revenue at Emaar and
about 12 per cent of its property assets.
Emaar Misr for Development is
developing five projects including
Uptown Cairo, the Marassi, the Mivida
and Cairo Gate in addition to the
Sheikh Khalifa bin Zayed housing
development project.
Etisalat has about one third of
Egypts mobile telephony market,
while Sharjah-based Dana Gas is the
countrys sixth ranked natural gas
producer in Egypt.
Bahrain has interests in Al Baraka
Banking Group, which has $2.3 billion
in Egyptian assets, and Qatar through
Barwa Real Estate Company which
is investing a reported $1 billion to
54-57 Egypt.indd 55 7/27/11 4:36:57 PM
,-&AUCUS1 20
<>PGK
develop 8.3 million square metres of
the New Cairo project.
However, the legal moves against
Mubarak and all deemed to be associated
with his familys business interests have
indicated that the old ways of conducting
transactions are over. The former
president and his sons are the subject
of probes into how they accumulated
their personal wealth. Billions of dollars
are said to have been acquired through
co-operative partnerships with both
domestic and foreign companies.
Hundreds of businessmen are
reportedly on a government watch
list awaiting inquiries and possible
legal action. Many are thought to have
departed to bolt holes in London and
Ibousards of Lovpt|ars oatbered |r Ca|ro's
Iabr|r Souare to deard faster refors.
<^pgk`jafèè^ a number ol oLher counLries,
including economies in Lurope, feX^cfYXc
iflc\kk\n_\\cnX`kè^kfY\YXZb\[n`k__Xi[
ZXj_% As a resulL k_\èk\i`d^fm\ied\ek`j
nfibè^_Xi[kf[ildlgjlggfik#especially
in Lhe region.
elsewhere to avoid arrest and also extract
as much of their wealth as they can from
the country. The larger fear though is that
foreign investors will also get cold feet.
Egypt has annulled some contracts
that granted plots of land on which to
build commercial and residential projects
based on the assertion that land was
granted to companies directly without
any bidding process or offer to the public
resulting in a sale below value.
Housing minister Fathi Abdelaziz
el-Baradei said in May that the government
will uphold a court ruling to annul a sale
of state land to developer Palm Hills. This
followed a court ruling the previous month
that the sale was illegal.
Some commentators have observed
that the calling to account has been
rushed and tinged with revenge and joy
at the downfall of previously powerful
figures deemed to be associated with the
previous regime rather than due process
being carried out.
Gulf investors including heavyweights
such as Saudi billionaire Prince
al-Waleed bin Talal and the UAEs
Futtaim Group, which is involved in the
Cairo Festival City project, have been
hit. Others drawn in include Damac
and the Egyptian-Kuwaiti Company for
Investment and Development concerning
transactions in the Red Sea governorate
and land purchases in Ayyat respectively.
On May 10, an Egyptian court
sentenced Damacs chairman Hussain
Sajwani, a UAE citizen, to a prison
sentence in his absence and fined him
over a transaction in 2006 approved by
the then Tourism Minister Mohammed
Garranah. Sajwani maintains that the
deal was fully approved by Egyptian
officials at the time of purchase.
As a result Prime Minister Essam
Sharaf has had to tour the Gulf in an
attempt to reassure Gulf businessmen
and companies that their investments
in Egypt are safe.
Damac Properties is going to arbitration
at the Washington-based International
Centre for the Settlement of Investment
Disputes (ICSID) over the $40.5 million
of fines imposed for allegedly acquiring
property at below market price. The
company says it expects the case to cast
an international spotlight on the political
vendettas currently being pursued by
Egypts new regime at the behest of the
Egyptian public.
It adds this ICSID case may subject
R
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54-57 Egypt.indd 56 7/27/11 4:36:59 PM
,-&AUCUS1 20
<>PGK
develop 8.3 million square metres of
the New Cairo project.
However, the legal moves against
Mubarak and all deemed to be associated
with his familys business interests have
indicated that the old ways of conducting
transactions are over. The former
president and his sons are the subject
of probes into how they accumulated
their personal wealth. Billions of dollars
are said to have been acquired through
co-operative partnerships with both
domestic and foreign companies.
Hundreds of businessmen are
reportedly on a government watch
list awaiting inquiries and possible
legal action. Many are thought to have
departed to bolt holes in London and
Ibousards of Lovpt|ars oatbered |r Ca|ro's
Iabr|r Souare to deard faster refors.
<^pgk`jafèè^ a number ol oLher counLries,
including economies in Lurope, feX^cfYXc
iflc\kk\n_\\cnX`kè^kfY\YXZb\[n`k__Xi[
ZXj_% As a resulL k_\èk\i`d^fm\ied\ek`j
nfibè^_Xi[kf[ildlgjlggfik#especially
in Lhe region.
elsewhere to avoid arrest and also extract
as much of their wealth as they can from
the country. The larger fear though is that
foreign investors will also get cold feet.
Egypt has annulled some contracts
that granted plots of land on which to
build commercial and residential projects
based on the assertion that land was
granted to companies directly without
any bidding process or offer to the public
resulting in a sale below value.
Housing minister Fathi Abdelaziz
el-Baradei said in May that the government
will uphold a court ruling to annul a sale
of state land to developer Palm Hills. This
followed a court ruling the previous month
that the sale was illegal.
Some commentators have observed
that the calling to account has been
rushed and tinged with revenge and joy
at the downfall of previously powerful
figures deemed to be associated with the
previous regime rather than due process
being carried out.
Gulf investors including heavyweights
such as Saudi billionaire Prince
al-Waleed bin Talal and the UAEs
Futtaim Group, which is involved in the
Cairo Festival City project, have been
hit. Others drawn in include Damac
and the Egyptian-Kuwaiti Company for
Investment and Development concerning
transactions in the Red Sea governorate
and land purchases in Ayyat respectively.
On May 10, an Egyptian court
sentenced Damacs chairman Hussain
Sajwani, a UAE citizen, to a prison
sentence in his absence and fined him
over a transaction in 2006 approved by
the then Tourism Minister Mohammed
Garranah. Sajwani maintains that the
deal was fully approved by Egyptian
officials at the time of purchase.
As a result Prime Minister Essam
Sharaf has had to tour the Gulf in an
attempt to reassure Gulf businessmen
and companies that their investments
in Egypt are safe.
Damac Properties is going to arbitration
at the Washington-based International
Centre for the Settlement of Investment
Disputes (ICSID) over the $40.5 million
of fines imposed for allegedly acquiring
property at below market price. The
company says it expects the case to cast
an international spotlight on the political
vendettas currently being pursued by
Egypts new regime at the behest of the
Egyptian public.
It adds this ICSID case may subject
R
L
U
1
L
R
S
54-57 Egypt.indd 56 7/27/11 4:36:59 PM
R
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CULF BUSlNLSS&,.
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Saud| K|ro Abdu||ab (r|obt) eets Lovpt's
Pr|e N|r|ster Lssa Sbaraf.
hectares) with 75,000 feddans handed
back to the state.
Faisal Ibrahim al-Aqil, a director of
Construction Products Holding Company,
which is an affiliate of Saudi Binladen
Group, has declared that the company is
confident things will go back to normal.
His company is seeking to develop an
industrial zone over 1.5 million square
metres in Cairo.
Investment firm Abdul Muhsin
Al Hokair Holding, which invests in
shopping malls, said it intends to stick
Egypt to international liability far greater
that what it apparently hopes to recover
by its ongoing legal actions against
investors who conducted business with
Mubaraks ministers. It will also raise
serious questions among foreign investors
about the safety of investing in Egypt.
Other controversial cases include the
selling of the Omar Effendi chain to the
Saudi Anwal company owned by Saudi
investor Jameel al-Qanbit. This deal was
one of those annulled by the Egyptian
Administrative Court.
Government officials are clearly
perplexed by Gulf reaction. As a result,
an Investment Contracts Settlement
Committee, chaired by the acting
Prime Minister, Essam Sharaf, has been
established to study each contract that is
challenged and resolve disputes, which
if left to fester could accelerate a flight of
foreign capital and investors from Egypt.
However, there does seem a desire to
move forward.
Last month, Prince Al-Waleed bin
Talal said an agreement had been signed
with the Egyptian government to resolve
a dispute over Toskka land, which
was allocated to Kingdom Agricultural
Development Holding. Under the
agreement the Saudi multi-billionaire
will reclaim 25,000 feddans (10,500
to its investment plans in Egypt. Our
strategy and work is continuing. We have
great confidence in the Egyptian market.
Some are voicing optimism that now
is the moment to invest. Wael Tawil CEO
of Abu Dhabi-based Baniyas Investment
and Development Company is quoted as
saying we do feel Egypt will be a strong
magnet for investment across the board.
The Kuwait Investment Authority,
the countrys state sovereign fund, has
indicated it will establish a company
capitalised at $1 billion to invest in
Egypts stock market.
Sheikh Saleh Kamel, the head of Saudi
Arabias Chambers of Commerce and
Industry has indicated that a group of
Saudi businessmen plan to set up an
investment development bank in Egypt
capitalised at $16.9 billion.
Qatars ambassador to Egypt, Saleh
Abu Al Enein, says he expects projects
when implemented will exceed $10
billion since It is necessary to give
support to Egypt as it grapples with the
burdens it inherited from the previous
regime. The Emir state has pledged to
invest in a range of sectors including
tourism, housing, oil, transport,
agriculture, education and health.
Essentially the foreign risk takers
in Egypt, whether from the region or
elsewhere, are basing their commitment
on a new administration being able to
keep a lid on a highly volatile political
culture. Massive and costly social
reforms will be required to succeed. The
question is how the bills are going to be
met in a country whose population of
84.4 million is expected to increase to
129.5 million by 2050.
The country has not ground to a halt
as some pessimists predicted but Gulf
support will be vital to prevent that
outcome. While the stakes are high the
rewards for investors could be substantial.
If Egypt takes the right paths toward
prosperity and can maintain four per
cent annual growth HSBC has predicted
that by 2050 its market will be the
largest in the region and the worlds
19th largest economy.
"Finance MinisLer Samir
Radwan declared LhaL <^pgk
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packages lrom Cull Arab
sLaLes such as Saudi Arabia
and OaLar."
54-57 Egypt.indd 57 7/27/11 4:37:00 PM
,/&8L>LJK)'((
THE HOME STRETCH
58-61 Kuwait real estate.indd 58 7/27/11 4:38:43 PM
,/&8L>LJK)'((
THE HOME STRETCH
>LC=9LJ@E<JJ&,0
I<8C<JK8K<
The regions population is expected to increase
from 40.6 million in 2010 to 45.6 million by
2015. And theres little doubt that population
growth over the coming years will ensure ongoing
demand and pressure for housing across
market segments in the region.
In the GCC there remains a disconnect
between supply and demand be it oversupply
or undersupply. How individual states cope with
these disconnects will hinge upon a number of
factors, including land prices, the level of political
will to liberalise domestic home loans markets and
how best to manage the behaviour of lenders.
The largely stagnant UAE home loans market
recently received a boost when United Arab
Bank (UAB) cut its mortgage rate to 4.99
per cent (for both UAE nationals and
expats), while HSBC Bank Middle
East reduced interest rates on
25-year loans by 76 basis
points to 5.49 per cent
and relaxed its LTV
(loan to value ratio) and minimum monthly salary
requirement criteria.
However, Tom Smith, executive vice president,
head of retail banking at United Arab Bank, says:
The last few months have seen a significant
change in the (UAEs) mortgage landscape. Though
current market interest rates are considered low,
mortgage customers are still paying a high rate on
mortgages taken out in the past.
Importantly, UABs target segment is
characterised by customers with higher income
levels who present a lower repayment risk, which
justifies this attractive rate.
Prices seem to be holding steady and in
some select developments have even increased
marginally. This will raise interest levels across the
retail landscape and will enhance the recovery of
the home loans market in future, he adds.
James Pearson, head of assets and liabilities,
UAE Personal Financial Services, at HSBC Bank
Middle East, picks up this point, arguing the recent
changes to the banks lending criteria reflect an
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GFGLC8K@FE>IFNJ8E;98EBC@HL@;@KP<8J<J%9LKI<>@FE8C
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improvement in market conditions.
'There is a gradual increase in
demand for mortgage lending in the
UAE as the economy is heading towards
recovery with its growth predicted to
reach 3.3 per cent this year, compared
to 3.2 per cent in 2010, according to the
International Monetary Fund, he says.
We believe that the market position
is better and more normalised and
obviously stability in the property
market will drive growth as customers
confidence increases. House price
growth, of even two to three per cent,
will support normality of the market and
help restore sustainable demand.
Despite this upbeat tone, research
firm Business Monitor International
says the UAEs banking sector is set to
underperform its regional peers over
the next 18 months with a weaker real
estate market continuing to have a
negative impact.
Against this backdrop, property
consultants Jones Lang LaSalle estimate
that 54,000 homes will come onto the
market in Dubai from 2011 to 2015. Or
about 15 per cent to 20 per cent of the
existing supply.
At the opposite end of the spectrum,
a robust Saudi Arabian economy belies
the fact that the kingdom still has an
undeveloped home loans market. Longer
term, KSA will likely offer rich pickings
for lenders if the long-awaited mortgage
law reform comes to pass over the next
few months.
An estimated 70 per cent of Saudis
dont own their own homes and there
25 per cent
lncrease in reporLed nonperlorming
loans in UAL Lo S3.9 billion in 200.

55 per cent
1ransacLions in KuwaiL's privaLe housing
segmenL as a proporLion ol LoLal
LransacLions in O 20.

KWD 224,000
Average LransacLion value in KuwaiLi
privaLe housing segmenL down lrom
KWD258,000 in O^ 200.

QR1.2 million
New maximum permiLLed home loans
ceiling in OaLar lor eligible applicanLs.

QR5.2 billion
AmounL Lhe governmenL in OaLar has
allocaLed lor zeroinLeresL housing loans
lor naLionals in Lhe sLaLe budgeL lor
202.
=8JK=8:KJ1>::?FLJ@E>
is a domestic housing supply shortage,
due to population growth and an influx
of expatriate workers. Mindful of this,
the government aims to boost home
ownership to 80 per cent by 2024 through
a combination of increasing the supply
of affordable housing and expanding
financing options for its citizens.
While a $400 billion government
infrastructure spending plan is being
implemented, in part to address the
above problems, Banque Saudi Fransi
noted in a March report that private and
public developers need to build around
275,000 units a year through 2015, just
to meet the country's demands for about
1.65 million new homes.
John Harris co-head, Saudi Arabia,
for Jones Lang La Salle, cautions that
implementation of the new mortgage
law framework will not necessarily be a
silver bullet at least in the short term.
We expect the impact of the mortgage
legislation will be gradual. Based on our
experience of similar legislation in other
countries, investors will take some time
to watch the courts to see if enforcement
rights are supported.
The banking sector is prudently
regulated by SAMA so we dont expect
the banks will unleash a flood of capital
towards home lending. Nonetheless over
time the legislation will enable secondary
markets and so increase the amount and
lower the cost of home finance available
to middle class households, says Harris.
He adds that mortgage laws will not
necessarily solve affordability problems
in the kingdom. Indeed, socioeconomic
challenges surrounding wage levels,
skills and labour participation rates may
exacerbate the problem.
He further notes: The need for the
typical Saudi household to accommodate
a relatively large number of people also
means the physical size of housing needs
to be bigger and, hence, more costly.
Economically, Harris
says that with growing
cities, negative real
S
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In addition, housing affordability
remains out of the reach of many
Kuwaitis even after factoring in a
government lending scheme offering
first-time buyers loans of KD70,000; and
with many nationals applying for 15-year
personal loans of an additional KD70,000.
Elsewhere in the Gulf the Bahrain, the
government has already announced plans
to build 50,000 housing units over the
next five years to meet a gap in social
housing that has had families waiting for
more than a decade for homes in some
cases. Yet with an estimated waiting list
of 46,000 and expectations of this list
expanding by three or four thousand a
year over the period, full resolution of the
problem is likely to prove unattainable.
Moreover, while the maximum
mortgage available under government
subsidised housing loan regulations has
recently been increased to BD60,000
from BD40,000 and loan terms extended
to 30 years from 25, there are few
developments that can be constructed
to meet these requirements, given land
values have been beefed up by rampant
speculation in the run-up to the global
credit crisis in 2008.
Recent developments in the GCC
give some grounds for optimism at
least in terms of legislators and other
power centres being prepared to
discuss conditions operating in their
respective housing sectors. Yet it is
still too early to tell whether regional
political will is strong enough to
mobilise thought into action.
"RecenL legislaLion Xccfnè^
nfd\ekfj\Zli\_fljè^
cfXej ol up Lo KD70,000
has ^\e\iXk\[Xjli^\è
[\dXe[lor condominium
aparLmenLs."
interest rates and no property taxation,
Saudi investors prefer land to investment
in developed assets.
This keeps land values high and as
a result it is almost impossible to build
affordable housing unless the land is
secured on concessionary terms, he says.
In Kuwait, meanwhile, recent legislation
allowing women to secure housing loans
of up to KD70,000 has generated a surge
in demand for condominium apartments,
according to local real estate agency
Coldwell Banker Kuwait.
The report notes that developers
there have started purchasing tracts
of land in order to construct large
condominium complexes to feed into
what is seen as a potentially lucrative
new market sector.
Yet, the mortgage market in Kuwait
isnt fully developed yet, given Islamic
lenders are allowed to offer home
financing packages while
conventional lenders are not.
Pous|ro affordab|||tv rea|rs out
of reacb for arv KuWa|t|s.
-)&AUCUS1 20
While the era of cheap hydrocarbons is
long over, the same seems true for solid
minerals as prices reach record levels.
Demand is driving the worlds mining
companies to intensify exploration
in virtually every part of the globe,
including Arabia, where bankable
opportunities are fast emerging.
On the back of the gold boom, the
state-owned Saudi Arabian Mining
Company (Maaden) recently announced
a doubling of second quarter year on
year profits. The state-owned company,
formed in 1997, already operates five
mines and is contemplating developing
several more in the kingdom.
Australian company Centamin is about
to reap the reward for its risk-taking by
investing in Egypts first industrial-scale
gold mining venture with the company
seemingly unaffected by the countrys
political turmoil and due to ratchet up
production to reach 290,000 ounces-a-year.
Maaden and other prospectors in the
kingdom are not focusing their efforts just
on the lure of precious metals. Within
the next decade Saudi Arabia is likely to
be a major mining country, with bauxite,
phosphates and iron as well as gold,
copper, zinc, nickel deposits and other ores
being exploited in large-scale enterprises.
Maadens $16 billion investment
strategy backed by the Public Investment
Fund and Saudi Industrial Development
Fund is designed to play a major role
in the diversification of Saudi Arabias
hydrocarbons based economy.
The core of the kingdoms wealth lies
in the vast belt of mineral rock contained
in the Arabian Shield that extends from
the Red Sea border with Egypt and
Sudan to central Saudi Arabia.
While the mountain range and valleys
have a rich history of gold mining going
back 3,000 years with more than 1,000
recorded ancient mine sites, it is only in
1he region's mineral Lrove is Loo valuable Lo ignore.
Saudi Arabia is leading Lhe region's march Lowards
mining Lo diversily Lhe economy
K<OK9PIF9<IK98@C>@E>
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the last few years of soaring mineral prices
that investors have become interested.
In the late 1970s and early 1980s
Frances Bureau de Recherches
Geologiques et Minieres (BRGM)
identified some 6,000 prospects and
mineral occurrences though a vast range
of exploitable minerals has been identified
in many other areas of the kingdom.
Substantial prospects have also been
identified on the Gulf side of Arabia.
In Oman more than 350 quarrying and
mining operations both metallic and
non-metallic are currently under way or
being developed.
According to Omans Minister of
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62-65 Mining.indd 62 7/27/11 4:42:02 PM
>LC=9LJ@E<JJ&-*
D@E@E>
Commerce and Industry, Maqbool bin Ali Sultan, aggressive
exploration work in particular for copper is underway. The
sultanate already has a refinery fed originally from a now
depleted mine near Sohar, which has since been dependent on
imported concentrates.
Oman also has considerable and largely untapped resources
of chromite, dolomite, zinc, limestone, marble, gypsum, silicon,
cobalt, iron as well as copper and gold.
Steel-grade limestone is already being exported from South
Oman to India. Indian cement companies are also looking at
developing gypsum deposits with the possibility of a quarry
being established in the Thumrait area.
The government-sponsored Takamul Investment Company
has plans for a Minerals City to serve as a hub for a number of
minerals-based downstream processing projects.
These include a $450 million salt/soda ash venture with
Indias Tata group and a $40 million
silicon carbide processing facility
in partnership with Indias SNAM
Abrasives. Brazils Vale International,
which is building an iron-ore pelletizing
plant at Sohar, is also examining mineral
exploration opportunities in Oman.
Adoption of investor friendly mining
legislation in both Oman and Saudi
Arabia allows 100 per cent foreign
ownership, which has acted as a strong
stimulus to foreign companies. As a
result mining is likely to become an
increasingly mainstream activity.
Even with state-backing, mining
ventures are not for the faint hearted.
62-65 Mining.indd 63 7/27/11 4:42:09 PM
-+&AUCUS1 20
D@E@E>
N`k_èk_\e\ok[\ZX[\JXl[`8iXY`X`jc`b\cpkfY\X
dXafidèè^Zflekip# wiLh bauxiLe, phosphaLes and iron
as well as gold, copper, zinc, nickel deposiLs and oLher ores
being exploiLed in largescale enLerprises."
and pelletising plant on the coast close to
a proposed deep-water port and related
power and desalination facilities.
Australias Perth-based Alara Resources
formed a joint venture with Saudi
Arabias United Arabian Mining Company
(Manajem) last October to draw up a
bankable feasibility study for zinc and
copper projects at Khnaiguiyah and
Mutiyah. Alara is also exploring for copper
and gold at three locations in Oman.
The project, located about 180
kilometres west of Riyadh, is one of
the most advanced base metals project
in Saudi Arabia. A feasibility study
undertaken by Manajem targets a
production of 55,000 tonnes of zinc a
year over a 10-year period using open
pit mining methods.
Maaden is looking to exploit magnesite
deposits at Zarghat, 700 kilometres north-
east of Jeddah. The raw material will be
processed at a calcining and fusion plant
to be built on the Red Sea to produce
20,000 tonnes-a-year of electro-fused
Investment calculations have to be finely
judged against political risk and price
projections for mined output when it is
ultimately marketed because bringing a
mine venture on stream can take years,
sometimes decades.
Nevertheless there has not been a
shortage of risk taking ventures. Al
Masane Al Khobra Company is due
to start production in Saudi Arabia of
700,000 tonnes-a-year of zinc, gold,
copper and silver from a mine in
Najran province located 640 kilometres
southeast of Jeddah.
Ore will be taken by road 414
kilometres to Gizan on the Red Sea
for shipment initially to smelters and
refineries in Europe and the Far East.
Eventually the zinc will be processed at
facilities to be developed in Yanbu.
The private sector mining venture has
been under consideration for more than
a decade. Recent financing from the
Amman-based Arab Mining Company,
whose shareholders include the
governments of Saudi Arabia, Kuwait,
Iraq and the UAE, has allowed the
project to progress.
The UKs London Mining after
upgrading a bank feasibility study for
its Wadi Sawawin project in north-west
Saudi Arabia is hopeful that its $1.9
billion mine venture in partnership with
the Saudi National Mining Company will
soon get the green light.
The project envisages mining and
primary crushing of ore at the mine site for
production of five million tonnes-a-year of
direct reduction iron pellets for use in steel
plants with ore trucked to a beneficiation
C
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62-65 Mining.indd 64 7/27/11 4:42:10 PM
CULF BUSlNLSS&-,
D@E@E>
diammonium phosphate (DAP) at
processing facilities at Ras Al Khair
on the Arabian Gulf coast. Production
started in June at the new plant complex.
Commercial production is expected
to be reached within the next three
months and at full capacity MPC will
produce three million tonnes-a-year of
granular DAP as well as 400,000 tonnes
of excess ammonia and 200,000 tonnes
of sulphuric acid.
In three years time another huge
mining venture will come on stream at
Az Zabirah near the town of Qiba, 180
kilometres north of Buraidah. Production
of four million tonnes-a-year of bauxite
over 30 years is envisaged from the mine
now under development.
The bauxite will be transported by
train from the north to Ras Al Zour
situated 90 kilometres north of Jubail,
where an alumina refinery, aluminium
smelter, rolling mill and related
infrastructure including a 2,400 MW
magnesia, which is used to line furnaces.
The company has already begun initial
production of caustic calcined magnesia
at its processing plant in Al Madinah Al
Munawarah using magnesite mined at Al
Ghazala in the Hail region.
Khalid Al Mudafer Maadens president
and CEO believes the project demonstrates
how the mining industry can bring
sustainable employment and investment
in regional development, as well as new
industries to the kingdoms economy.
However, it is two massive mining and
processing projects in northern Saudi
Arabia and on the Gulf coast that will
define the kingdoms growing credentials
as a global force in the extraction and
marketing of industrial raw materials.
Maaden Phosphate Company (MPC),
a joint venture with Saudi Arabian
Basic Industries Company, is exploiting
a world-class phosphate deposit at Al
Jalamid in northern Saudi Arabia which
is already being used to manufacture
power and combined desalination plant
are under construction.
The US Alcoa has a 25.1 per cent
stake in the venture. The fully-integrated
aluminium complex is due to be
completed by 2013 when operations at the
smelter and rolling mill will commence
at first using imported materials. The
refinery, as well as the mine, is scheduled
to become operational in 2014.
A planned 1.8 million tonnes-a-year
of alumina will be processed to produce
"AdopLion ol èm\jkfi
]i`\e[cpdèè^c\^`jcXk`fe
èYfk_FdXeXe[JXl[`
8iXY`XXccfnj(''g\i
Z\ek]fi\`êfne\ij_`g#
which has acLed as a
sLrong sLimulus Lo loreign
companies. As a resulL
dèè^`jc`b\cpkf
Y\Zfd\XeèZi\Xjè^cp
dXèjki\XdXZk`m`kp%
740,000 tonnes of aluminium. The rolling
mill, with an initial capacity of 250,000
460,000 tonnes, will concentrate
on production of sheet metal for the
manufacture of cans and other products.
Completion of a new 1,392 kilometres
railway has been a pivotal factor in both
the phosphate and bauxite projects.
The track is one of the kingdoms most
spectacular and largely understated
achievements.
A four wagon train began a trial
run carrying 200 tonnes of phosphate
concentrate from the Al Jalamid to Ras
Az Zour port in May. But by next year
trains pulling 155 wagons will transport
loads of 15,000 tonnes.
Saudi Arabias long-term commitment
to develop its mining industry is being
emulated by others in the region, notably
Morocco, Jordan and Iraq which are also
seeking to develop valuable phosphate
and other mineral reserves now too
valuable for the region to ignore.
A| Nasare A| Kbobra
Coparv |s due to start
product|or of I00,000
torres of z|rc, oo|d,
copper ard s||ver |r KSA.
62-65 Mining.indd 65 7/27/11 4:42:13 PM
--&8L>LJK)'((
8
s banks continue mopping
up their collective messes,
following the near implosion
of the global financial system in 2008,
what has become clear is that the days
of easy profit pickings from investment
banking operations are a thing of the
past. Regulators have largely seen to that
through the implementation of Basel
III the new global regulatory standard
governing bank capital adequacy and
liquidity, agreed to by central bankers
and regulators in September 2010.
Banks face challenges on a number of
fronts not least having to diversify their
revenue streams as they look to ramp up
their retail operations, as well as improving
customer trust by further engaging with
them. All of this is set against a backdrop
of managing risk on a day-to-day basis
and complying with the more onerous
regulatory requirements of Basel III.
Despite this, independent technology
analysts Ovum believe that banks are up
to the task and is forecasting global retail
banking technology spending to increase
9Xj\c@@@i\^lcXkfip^l`[\cè\jd\Xek_XkcfZXcYXebjn`cc_Xm\kfYffjk
k_\ìk`\ife\ZXg`kXcXe[]fZljfei\kX`cZljkfd\ijXe[Z_Xee\cj%
K<OK9PD8IK@EDFII@J
D8E8>@E>
98EB@E>I@JB
24 per cent to $132 billion, five years
from now.
In the Middle East, spending is forecast
to rise at a compound annual growth
rate (CAGR) of 5.6 per cent from 2011 to
2015. In comparison, spending in the US
is set to grow 2.5 per cent annually and
in the UK/Ireland, by just 0.7 per cent.
If Basel III is serving as the necessary
wake-up call for the industry even
if many commentators still believe the
regime to be too soft it also brings into
sharp relief the fact that reliance on the
66-69 Banking Regulations.indd 66 7/27/11 5:15:28 PM
--&8L>LJK)'((
8
s banks continue mopping
up their collective messes,
following the near implosion
of the global financial system in 2008,
what has become clear is that the days
of easy profit pickings from investment
banking operations are a thing of the
past. Regulators have largely seen to that
through the implementation of Basel
III the new global regulatory standard
governing bank capital adequacy and
liquidity, agreed to by central bankers
and regulators in September 2010.
Banks face challenges on a number of
fronts not least having to diversify their
revenue streams as they look to ramp up
their retail operations, as well as improving
customer trust by further engaging with
them. All of this is set against a backdrop
of managing risk on a day-to-day basis
and complying with the more onerous
regulatory requirements of Basel III.
Despite this, independent technology
analysts Ovum believe that banks are up
to the task and is forecasting global retail
banking technology spending to increase
9Xj\c@@@i\^lcXkfip^l`[\cè\jd\Xek_XkcfZXcYXebjn`cc_Xm\kfYffjk
k_\ìk`\ife\ZXg`kXcXe[]fZljfei\kX`cZljkfd\ijXe[Z_Xee\cj%
K<OK9PD8IK@EDFII@J
D8E8>@E>
98EB@E>I@JB
24 per cent to $132 billion, five years
from now.
In the Middle East, spending is forecast
to rise at a compound annual growth
rate (CAGR) of 5.6 per cent from 2011 to
2015. In comparison, spending in the US
is set to grow 2.5 per cent annually and
in the UK/Ireland, by just 0.7 per cent.
If Basel III is serving as the necessary
wake-up call for the industry even
if many commentators still believe the
regime to be too soft it also brings into
sharp relief the fact that reliance on the
CULF BUSlNLSS&-.
98EB@E>
"ln iLs January 20 sLudy,
LrnsL & Young lound LhaL
.(g\iZ\ekf]i\jgfe[\ekj
m`\n\[kiljkXj_`^_cp
`dgfikXekkfk_\ì
g\ijfeXci\cXk`fej_`g
n`k_k_\ìgi`dXipYXeb%
SevenLy per cenL, on Lhe
oLher hand, menLioned
LransacLion speed, while
--g\iZ\ek]fZlj\[fe
j\im`Z\hlXc`kp%
wholesale money markets for funding
requirements needs to be reduced,
assuming the possibility of credit
markets going back into a deep freeze.
One obvious way of reducing this
dependence is to generate additional
business on the customer deposits
side of the equation, as well as
rolling out internet and mobile phone
banking offerings.
Ironically, many of the banks that
failed to earmark major investment for
retail branch networks and, to a lesser
extent, IT systems, are in some ways
better placed, given they can harness
technological improvements allowing
them to more easily integrate internet
and mobile phone banking services
into their operations, as opposed
to those banks saddled with ageing
IT systems. Moreover, in emerging
markets such as India, where banks
have less branch network reach than in
the West, internet and mobile banking
services are more practical.
In a study of 20 financial
institutions around the world offering
mobile banking services, carried out
by TowerGroup, one unidentified
Middle East Bank achieved a 300 per
cent on investment after allowing its two
million mobile banking customers to pay
utility bills through their mobile devices.
As Jaroslaw Knapik, senior analyst at
Ovum puts it: There is a strong focus on
online platforms and their extension onto
mobile devices and tablets, given their
ability to service clients at a lower cost.
In addition, technologies that allow
smarter selling and servicing, such
as customer analytics and channel
integration are expected to remain hot
spot areas in the near future, he notes.
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1he Basel lll lramework requires Lhe
world's banks Lo implemenL a number
ol measures Lhe key requiremenL
being Lhey will be compelled Lo
increase Lhe amounL ol Lop qualiLy
capiLal (Lier one capiLal) Lhey musL
hold in order Lo be able wiLhsLand
shocks wiLhouL having Lo resorL Lo
sLaLe inLervenLion.
As a resulL Lhe core Lierone capiLal
raLio is seL Lo increase (in sLeps) Lo
^.5 per cenL by 205.
1ier one (core) capiLal, consisLs
largely ol shareholders' equiLy.
Under Basel lll Lhe delniLion ol
core Lier one has been LighLened so
LhaL common equiLy and reLained
earnings musL make up Lhe bulk ol a
bank's capiLal base.
ln addiLion Lo Lhe core Lierone
requiremenL banks will have Lo carry
a lurLher "counLercyclical" capiLal
conservaLion buller ol 2.5 per cenL
by 209.
1he luncLion ol Lhe buller is Lo allow
a bank Lo Lap iL should excess crediL
lead Lo loan losses wiLhouL having Lo
raise lresh capiLal.
N?8K@J98J<C@@@6
Attract|ro ard reta|r|ro custoers |s |ev for sbor|ro up t|er ore cap|ta|.
to a younger more tech savvy customer
base. This is a way to gain share and
be noticed in a market that is already
crowded, says Jaffery.
In its January 2011 study, Ernst
& Young found that 71 per cent of
respondents viewed trust as highly
important to their personal relationship
with their primary bank. Seventy per
cent, on the other hand, mentioned
transaction speed, while 66 per cent
According to Knapik ever increasing
regulatory requirements will also drive
investment into technologies that
reduce costs, such as data management,
business intelligence and analytics.
Global spending on various middle-office
components, such as risk management,
anti-fraud, compliance or performance
management will increase too.
In the GCC though, improving personal
contact with customers is an issue banks
will also need to address. The argument
that a satisfied customer is more likely to
stay loyal to a bank, as well as more likely
to recommend that bank to others and be
more open to more product cross selling,
is, on the face of it, a persuasive one.
As Salmaan Jaffery, MENA retail
banking sector leader, Ernst & Young,
argues: On the retail side, customers are
demanding and expecting more. They are
younger and have less time and patience
for poor service.
One consequence of this is that a
number of new banks in the region will
differentiate their services by appealing
"Jallery noLes LhaL
dXi^èjn\i\Xci\X[p
Zfdè^le[\igi\jjli\
gi`fikf9Xj\c@@@Xe[
k_XkdXi^èjhl\\q\`j
Xefe^fè^k_i\Xkefk
aljkèk_\èm\jkd\ek
YXebè^Xi\eX#YlkXcjf
fek_\i\kX`cj`[\, due Lo
increased compeLiLion and
Lhe Lrend ol leading banks Lo
become sLronger and more
ellcienL."
CULF BUSlNLSS&-0
98EB@E>
(,'g\iZ\ek
1he increase beLween 200 and 20
in Lhe proporLion ol Lhe Chinese
populaLion (0 per cenL Lo 25 per cenL)
using mobile banking.
,''d`cc`fe
1he number ol mobile banking users
by 205.
-Y`cc`fe
ForecasL mcommerce revenues in Lhe
US by end20, growing Lo S3 billion
by 206. However, mcommerce will
only be 2 per cenL ol ecommerce in
20 and 7 per cenL in 206.
-.'Y`cc`fe
1oLal value ol mobile paymenLs lor digiLal
and physical goods, lorecasL lor 205.
DF9@C<:FDD<I:<9P
ELD9<IJ
determine whether existing business
models take sufficient account of market
uncertainties going forward.
Already, returns post-credit crisis
are being driven down as banks maintain
more capital on their books.
Jaffery notes: Banks will need a
greater proportion of liquid assets in their
balance sheets and will need more stable
funding. The effect of all of these items
(i.e. capital increases, more liquid assets
and more stable funding) is a reduction
in return on equity (ROE).
He adds that having a strong
customer agenda can increase ROE
by improving operational performance,
as less money is spent acquiring and
on-boarding customers.
It can also improve the credit quality
of a portfolio thereby mitigating losses
and write-downs as well as help
profitability. Hence, it can help offset
some of the ROE drain resulting from
capital requirements and charges
Banks are facing pressure on returns,
so costs are being constantly managed.
focused on service quality.
Unsurprisingly, the vast majority
of respondents (92 per cent) cited
the ATM as their most used channel,
although a sizeable 57 per cent said they
used mobile phone banking of some
description a response rate nearly four
times higher than that in Europe.
Ominously, nearly 43 per cent of
customers indicated moderate to high level
of effort in their last banking transaction.
To exacerbate matters Jaffery notes
that margins were already coming under
pressure prior to Basel III and that margin
squeeze is an ongoing threat not just in the
investment banking arena, but also on the
retail side, due to increased competition
and the trend of leading banks to become
stronger and more efficient.
While the headline impact of
Basel III may appear less obvious
on GCC banks, given their tendency
to be better capitalised than their
Western counterparts, capital and
liquidity management will still need
to be improved with banks needing to
Banks will therefore continue to find
ways to increase and improve self-service
through various channels.
In the end people will always require
basic banking services. Given that the retail
segment globally has traditionally been less
volatile than the corporate banking or the
investment banking segments, universal
retail banks have managed to weather the
economic crisis in revenue terms better
than highly diversified banks.
Basic to basics may be the best
approach for banks to pursue, but
only on the basis that fickle customers
can be sufficiently engaged.
In the case of mobile banking it
means fully understanding a customers
expectations of mobility, such as the
need to have a common experience
across mobile phone and laptop.
Old habits die hard, and while many
banks in the Middle East have invariably
focused on the needs of their corporate
clients, Basel III will likely force them
into breaking that mould by focusing on
their retail customers instead.
DfY`c\YXebè^
`jY\Zfdè^X
kfgZ_f`Z\]fi
Zljkfd\ij
.'&8L>LJK)'((
DATA CRUNCH
TOP DEALS AND GCC ECONOMIC INDICATORS
TOP DEALS GULF BUSINESS
100
l87
70
l7
berW|r1 Corrorot|or
A|1u||o| A|Ot|o|r
|or|ets Corrorv
Ootor |e1|o Serv|ces
bWA Woter A11|t|ves UK
||r|te1
A| Ot|o|r keo| |stote
lrvestrert or1
eve|orrert Corrorv
(8c.1S Sto|e)
Ootor C|rero & |||r
|str||ut|or Corrorv
(S7.7 Sto|e)
H. Cec|e|s|| |o|rv|o
S||r||oW AcrecotoWvc| |
!ro|cvjrvc| Sr oo
So|r Ho|1|rc
berW|r1 Corrorot|or. t|e US |ose1 rr|vote ecu|tv f|rr. |os occu|re1 bWA Woter A11|t|ves UK
||r|te1. o corrorv ercoce1 |r rrov|1|rc srec|o|tv Woter so|ut|ors for |r1ustr|o| or1 rrocess
Woter treotrert. 1eso||rot|or. or1 o|| f|e|1 |r1ustr|es. fror Seero lrvestrert bor| b.S.C.. t|e
bo|ro|r |ose1 |rvestrert |or| rrov|1|rc f|rorc|o| o1v|sorv serv|ces. for or erterrr|se vo|ue
of US 100 r||||or. !|e occu|s|t|or W||| cererote o returr of orour1 0 rerr cert or |ts
|rvestrert. or1 t|e so|e |s eirecte1 to |e rrof|to||e for Seero s|ore|o|1ers. !|e occu|s|t|or
W||| rrov|1e f|rorc|o| |oc||rc or1 eirert|se for t|e croWt| or1 1eve|orrert of bWA. |or||er
|r Serter|er c008. Seero lrvestrert bor| b.S.C. |ouc|t t|e corrorv fror C|ose brot|ers
|r|vote |cu|tv. t|e UK |ose1 rr|vote ecu|tv f|rr.
A|1u||o| A| Ot|o|r |or|ets Corrorv. t|e ||ste1 Sou1| Aro||o |ose1 corrorv ercoce1 |r
W|o|eso|e tro1|rc oct|v|t|es of foo1 rro1ucts. |os ocree1 to occu|re o 8c.1S rer cert sto|e
|r A| Ot|o|r keo| |stote lrvestrert or1 eve|orrert Corrorv. t|e Sou1| Aro||o |ose1
corrorv ercoce1 |r orerot|rc ro||s or1 s|orr|rc certres. for or ecu|tv cors|1erot|or of
SAk 07.0lr (l87.07l r||||or).
Ur1er t|e terrs of t|e ocreerert. A|1u||o| A| Ot|o|r |or|ets Corrorv W||| |ssue
.cS1.101 s|ores vo|ue1 ot o c|os|rc rr|ce of SAk 7.S os or l8 )ure c0ll W|t| or eic|orce
rot|o of ore s|ore |r A|1u||o| A| Ot|o|r |or|ets Corrorv oco|rst .4l07 s|ores |r t|e
A| Ot|o|r keo| |stote lrvestrert or1 eve|orrert Corrorv. |r|or to t|e occu|s|t|or.
A|1u||o| A| Ot|o|r |or|ets Corrorv |e|1 l1.cS s|ores |r A| Ot|o|r keo| |stote
lrvestrert or1 eve|orrert Corrorv. |ost occu|s|t|or. A| Ot|o|r keo| |stote lrvestrert
or1 eve|orrert Corrorv W||| oct os t|e W|o||v oWre1 su|s|1|orv of A|1u||o| A| Ot|o|r
|or|ets Corrorv. !|e trorsoct|or |s su|ject to orrrovo| fror recu|otorv out|or|t|es.
Ootor |e1|o Serv|ces |os ocree1 to occu|re S7.7 rer cert sto|e |r Ootor C|rero or1 |||r
|str||ut|or Corrorv. Ootor C|rero & |||r |str||ut|or Corrorv. t|e ||ste1 Ootor |ose1
ercoce1 |r t|e |us|ress of |rrort or1 1|str||ut|or of c|rero rov|es. esto|||s|rert
or1 rorocerert of c|reros or1 t|eotres. rro1uct|or or1 1|str||ut|or of correrc|o|
o1vert|sererts. or1 so|e or1 rert of rov|es. Ootor |e1|o Serv|ces. offers re1|o
corrur|cot|ors or1 o1vert|s|rc serv|ces.
So|r Ho|1|rc. t|e |e|oror |ose1 corrorv ercoce1 |r rorufoctur|rc. so|es or1 rerto| of
roWer cererotors. reto|||rc of ||c|t|rc rro1ucts. rrov|1|rc f|rorc|o| serv|ces or1 reo| estote
1eve|orrert. |os occu|re1 H. Cec|e|s|| |o|rv|o S||r||oW AcrecotoWvc| | !ro|cvjrvc| Sr.
o.o. (|SA). t|e |o|or1 |ose1 corrorv t|ot rorufoctures 1|ese| or1 cos fue| erc|res. fror
H. Cec|e|s|| |oror S.A.. t|e |o|or1 |ose1 corrorv t|ot rorufoctures roc||res. too|s.
or1 ecu|rrert for t|e s||r|u||1|rc |r1ustrv for o cors|1erot|or of ||N S1.4 r||||or.
|SA |os o|out cc0 err|ovees or1 rerorte1 o turrover of ||N 48 r||||or for t|e veor
er1e1 c0l0. !||s occu|s|t|or |s |r ||re W|t| t|e strotecv of So|r Ho|1|rc to eiror1 |ts
oct|v|t|es |r t|e erercv sector.
DEAL VALUE ($M) BIDDER TARGET DEAL DESCRIPTION
Aro||o C|o|o| |orocerert
||C
Cu|f Streor Asset
|orocerert
Aro||o C|o|o| |orocerert. ||C. t|e ||ste1 US |ose1 rr|vote ecu|tv f|rr. |os ocree1 to occu|re
Cu|f Streor Asset |orocerert. t|e US |ose1 osset rorocerert corrorv. fror lst|t|ror
Wor|1 Cor|to|. t|e u|o| |ose1 rr|vote ecu|tv f|rr. for or ur1|sc|ose1 cors|1erot|or. !|e
occu|s|t|or |s |r ||re W|t| Aro||o's strotecv to eiror1 |ts currert f|ie1 |rcore |us|ress or1
W||| strerct|er |ts ros|t|or |r t|e |oor rorocerert |r1ustrv. |ost occu|s|t|or. |or| |o|orev
four1er of Cu|f Streor W||| jo|r Aro||o. !|e trorsoct|or |s su|ject to certo|r terrs or1
cor1|t|ors or1 |s eirecte1 to corr|ete |r t|e t||r1 cuorter of c0ll.
DATA MONITOR AUGUST2011.indd 70 7/25/11 2:20:16 PM
.'&8L>LJK)'((
DATA CRUNCH
TOP DEALS AND GCC ECONOMIC INDICATORS
TOP DEALS GULF BUSINESS
100
l87
70
l7
berW|r1 Corrorot|or
A|1u||o| A|Ot|o|r
|or|ets Corrorv
Ootor |e1|o Serv|ces
bWA Woter A11|t|ves UK
||r|te1
A| Ot|o|r keo| |stote
lrvestrert or1
eve|orrert Corrorv
(8c.1S Sto|e)
Ootor C|rero & |||r
|str||ut|or Corrorv
(S7.7 Sto|e)
H. Cec|e|s|| |o|rv|o
S||r||oW AcrecotoWvc| |
!ro|cvjrvc| Sr oo
So|r Ho|1|rc
berW|r1 Corrorot|or. t|e US |ose1 rr|vote ecu|tv f|rr. |os occu|re1 bWA Woter A11|t|ves UK
||r|te1. o corrorv ercoce1 |r rrov|1|rc srec|o|tv Woter so|ut|ors for |r1ustr|o| or1 rrocess
Woter treotrert. 1eso||rot|or. or1 o|| f|e|1 |r1ustr|es. fror Seero lrvestrert bor| b.S.C.. t|e
bo|ro|r |ose1 |rvestrert |or| rrov|1|rc f|rorc|o| o1v|sorv serv|ces. for or erterrr|se vo|ue
of US 100 r||||or. !|e occu|s|t|or W||| cererote o returr of orour1 0 rerr cert or |ts
|rvestrert. or1 t|e so|e |s eirecte1 to |e rrof|to||e for Seero s|ore|o|1ers. !|e occu|s|t|or
W||| rrov|1e f|rorc|o| |oc||rc or1 eirert|se for t|e croWt| or1 1eve|orrert of bWA. |or||er
|r Serter|er c008. Seero lrvestrert bor| b.S.C. |ouc|t t|e corrorv fror C|ose brot|ers
|r|vote |cu|tv. t|e UK |ose1 rr|vote ecu|tv f|rr.
A|1u||o| A| Ot|o|r |or|ets Corrorv. t|e ||ste1 Sou1| Aro||o |ose1 corrorv ercoce1 |r
W|o|eso|e tro1|rc oct|v|t|es of foo1 rro1ucts. |os ocree1 to occu|re o 8c.1S rer cert sto|e
|r A| Ot|o|r keo| |stote lrvestrert or1 eve|orrert Corrorv. t|e Sou1| Aro||o |ose1
corrorv ercoce1 |r orerot|rc ro||s or1 s|orr|rc certres. for or ecu|tv cors|1erot|or of
SAk 07.0lr (l87.07l r||||or).
Ur1er t|e terrs of t|e ocreerert. A|1u||o| A| Ot|o|r |or|ets Corrorv W||| |ssue
.cS1.101 s|ores vo|ue1 ot o c|os|rc rr|ce of SAk 7.S os or l8 )ure c0ll W|t| or eic|orce
rot|o of ore s|ore |r A|1u||o| A| Ot|o|r |or|ets Corrorv oco|rst .4l07 s|ores |r t|e
A| Ot|o|r keo| |stote lrvestrert or1 eve|orrert Corrorv. |r|or to t|e occu|s|t|or.
A|1u||o| A| Ot|o|r |or|ets Corrorv |e|1 l1.cS s|ores |r A| Ot|o|r keo| |stote
lrvestrert or1 eve|orrert Corrorv. |ost occu|s|t|or. A| Ot|o|r keo| |stote lrvestrert
or1 eve|orrert Corrorv W||| oct os t|e W|o||v oWre1 su|s|1|orv of A|1u||o| A| Ot|o|r
|or|ets Corrorv. !|e trorsoct|or |s su|ject to orrrovo| fror recu|otorv out|or|t|es.
Ootor |e1|o Serv|ces |os ocree1 to occu|re S7.7 rer cert sto|e |r Ootor C|rero or1 |||r
|str||ut|or Corrorv. Ootor C|rero & |||r |str||ut|or Corrorv. t|e ||ste1 Ootor |ose1
ercoce1 |r t|e |us|ress of |rrort or1 1|str||ut|or of c|rero rov|es. esto|||s|rert
or1 rorocerert of c|reros or1 t|eotres. rro1uct|or or1 1|str||ut|or of correrc|o|
o1vert|sererts. or1 so|e or1 rert of rov|es. Ootor |e1|o Serv|ces. offers re1|o
corrur|cot|ors or1 o1vert|s|rc serv|ces.
So|r Ho|1|rc. t|e |e|oror |ose1 corrorv ercoce1 |r rorufoctur|rc. so|es or1 rerto| of
roWer cererotors. reto|||rc of ||c|t|rc rro1ucts. rrov|1|rc f|rorc|o| serv|ces or1 reo| estote
1eve|orrert. |os occu|re1 H. Cec|e|s|| |o|rv|o S||r||oW AcrecotoWvc| | !ro|cvjrvc| Sr.
o.o. (|SA). t|e |o|or1 |ose1 corrorv t|ot rorufoctures 1|ese| or1 cos fue| erc|res. fror
H. Cec|e|s|| |oror S.A.. t|e |o|or1 |ose1 corrorv t|ot rorufoctures roc||res. too|s.
or1 ecu|rrert for t|e s||r|u||1|rc |r1ustrv for o cors|1erot|or of ||N S1.4 r||||or.
|SA |os o|out cc0 err|ovees or1 rerorte1 o turrover of ||N 48 r||||or for t|e veor
er1e1 c0l0. !||s occu|s|t|or |s |r ||re W|t| t|e strotecv of So|r Ho|1|rc to eiror1 |ts
oct|v|t|es |r t|e erercv sector.
Aro||o C|o|o| |orocerert
||C
Cu|f Streor Asset
|orocerert
Aro||o C|o|o| |orocerert. ||C. t|e ||ste1 US |ose1 rr|vote ecu|tv f|rr. |os ocree1 to occu|re
Cu|f Streor Asset |orocerert. t|e US |ose1 osset rorocerert corrorv. fror lst|t|ror
Wor|1 Cor|to|. t|e u|o| |ose1 rr|vote ecu|tv f|rr. for or ur1|sc|ose1 cors|1erot|or. !|e
occu|s|t|or |s |r ||re W|t| Aro||o's strotecv to eiror1 |ts currert f|ie1 |rcore |us|ress or1
W||| strerct|er |ts ros|t|or |r t|e |oor rorocerert |r1ustrv. |ost occu|s|t|or. |or| |o|orev
four1er of Cu|f Streor W||| jo|r Aro||o. !|e trorsoct|or |s su|ject to certo|r terrs or1
cor1|t|ors or1 |s eirecte1 to corr|ete |r t|e t||r1 cuorter of c0ll.
CULF BUSlNLSS&.(
Notes: |ea|s are oaseo on tne oeooranv of taroet. o|ooer or venoor oe|no |n tne H|oo|e fast. for tne er|oo oetween June |8. 20|| ano Ju|v |7. 20||. Baseo on announceo oea|s. |nc|uo|no
|aseo ano w|tnorawn o|os. wnere oea| va|ue |s not o|sc|oseo. tne oea| nas oeen entereo oaseo on turnover of taroet exceeo|no S|0 m||||on. /ct|v|t|es exc|uoeo from tne tao|e |nc|uoe
roertv transact|ons ano restructur|nos wnere tne u|t|mate snareno|oers |nterests are not cnanoeo. Source: Heroermarket. /|| oo||ar (S) amounts |no|cateo aoove are |n US oo||ars.
Korvv Corruters|ore
|r|vote ||r|te1
Korecrores ||c
bo|ro|r S|ores
kec|ster|rc Corrorv
(c0 Sto|e)
Sou1| Crores & Stee|
Wor|s |octorv |t1
Korvv Corruters|ore |r|vote ||r|te1 t|e lr1|o |ose1 corrorv |rvo|ve1 |r rec|strv
rorocerert serv|ces |r1ustrv. |os occu|re1 o c0 rer cert sto|e |r bo|ro|r S|ores
kec|ster|rc Corrorv. t|e bo|ro|r |ose1 t|e secur|t|es rec|strv |us|ress. fror
K||C |o||ro. t|e bo|ro|r |ose1 f|rorc|o| serv|ces corrorv rrov|1|rc Au1|t. !oi
or1 A1v|sorv serv|ces or1 o su|s|1|orv of K||C. t|e SW|ter|or1 |ose1 rrov|1er
of ossurorce. toi or1 |eco|. or1 f|rorc|o| o1v|sorv serv|ces. for or ur1|sc|ose1
cors|1erot|or.
Korvv Corruters|ore |s o S0.S0 jo|rt verture |etWeer Korvv. t|e lr1|o |ose1
corrorv rrov|1|rc f|rorc|o| serv|ces or1 Corruters|ore ||r|te1. t|e Austro||o
|ose1 rrov|1er of f|rorc|o| ror|et serv|ces or1 tec|ro|ocv to t|e c|o|o| secur|t|es
|r1ustrv. !|e trorsoct|or |s o rort of Korvv Corruters|ore's eirors|or strotecv |r
t|e ||11|e |ost rec|or. |ost occu|s|t|or. K||C W||| reto|r 40 rer cert sto|e |r Korvv
Corruters|ore.
Korecrores ||c. t|e ||ste1 ||r|or1 |ose1 erc|reer|rc corrorv srec|o||se1
|r rrov|1|rc ||ft|rc so|ut|ors or1 serv|ces. |os occu|re1 Sou1| Crores & Stee|
Wor|s |octorv |t1 (Sou1| Crores). t|e Sou1| Aro||o |ose1 erc|reer|rc corrorv
srec|o||e1 |r 1es|cr|rc. rorufoctur|rc or1 se|||rc |r1ustr|o| crores. for or
ur1|sc|ose1 cors|1erot|or.
CULF BUSlNLSS OUAR1LRLY M&A AC1lVl1Y
FROM 200^ 1O 7 JULY 20
BREAKDOWN: TAKEOVER ACTIVITY BY SECTOR AND VOLUME
MlDDLL LAS1 ANNUAL M&A AC1lVl1Y
FROM 200^ 1O 7 JULY 20
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY SLC1OR
YL 20 VALUL
CULF BUSlNLSS AC1lVl1Y BY lNDUS1RY
SLC1OR YL 20 VOLUML
Delence
0.8
Delence
.^
Real LsLaLe
^.
ConsLrucLion
.5
Leisure
.0
0
c0
40
c0
0
c.000
4.000
c.000
8.000
l0.000
lc.000
l4.000
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 O1O4 O4 O4 O4 O4
N
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1
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(
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)
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Vo|ure
N
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|
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f

1
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|s
V
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|u
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(
r
)
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
c.000
4.000
c.000
8.000
l0.000
lc.000
l4.000
c004 c00S c00c c00 c008 c007 c0l0 c0ll
N
u
r
|
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r

o
f

1
e
o
|s
V
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(
r
)
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Vo|ure
Vo|ue
Vo|ure
N
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|
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f

1
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|s
V
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(
r
)
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
c.000
4.000
c.000
8.000
l0.000
lc.000
l4.000
c004 c00S c00c c00 c008 c007 c0l0 c0ll
N
u
r
|
e
r
o
f
1
e
o
|s
V
o
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(
r
)
Vo|ue
Vo|ure
Vo|ue
Vo|ure
N
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r
|
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f
1
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|s
V
o
|u
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(
r
)
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
c.000
4.000
c.000
8.000
l0.000
lc.000
l4.000
c004 c00S c00c c00 c008 c007 c0l0 c0ll
N
u
r
|
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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
lndusLrials &
Chemicals
^5.9
lndusLrials
& Chemicals
9.2
Real LsLaLe
8.^
Pharma,
Medical &
BioLech
3.2
1M1
9.9
Lnergy, Mining
& ULiliLies
5.^
Consumer
3.9
Business
Services
5.0
Financial Services
^.9
ConsLrucLion
6.8
Pharma, Medical
& BioLech
3.7
1ransporL
.^
Leisure
^.
Lnergy, Mining &
ULiliLies
^.
1M1
.0
Consumer
8.2
Financial Services
2.3
Business Services
3.7
.)&AUCUS1 20
In association with
TOTAL RETURN INDEX
HSBC/NASDAQ DUBAI MIDDLE EAST
SOVERIGNS
CORPORATES
BANKS
SUKUK
I550k 000P0N Mk]0kI]Y 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
A|u |o|| Covt S.S 4|8|c0l4 US ll0.44 l.SS Aoc AA
u|o| Covt c. l0|S|c0lS US l0S.18 S.cc Nk Nk
u|o| Covt .S l0|S|c0c0 US l0c.S0 c.7 Nk Nk
Ootor Covt 4 l|c0|c0lS US l0S.l7 c.44 Aoc AA
bo|ro|r Covt S.S 1|1l|c0c0 US 7.88 S.8l Nk bbb |*
|cvrt Covt S.S 4|c7|c0c0 US l0l.00 S.c0 bo1 bb
|orocco Covt 4.S l0|S|c0c0 |Uk 7l.S0 S.l Nk bbb
!oco 4.S 7|lS|c0l4 US l0S.S0 c.7l A1 Nk
A|1or l0.S S|c|c0l4 US ll0.88 c.S0 b1 b
u|o| Ho|1|rc |-1.S|rs c|l|c0lc US 7S.S0 7.1S b1 Nk
|WA c.1S l0|cl|c0lc US l04.cS S.41 boc Nk
Ote| 1.1S l0|l4|c0lc US l00.cS 1.1c Ac A
Ootor| |or S |cl|c0c0 US l01.88 4.4 Aoc AA
SAblC 1 ll|c|c0lS US l00.S0 c.8 Al A-
|urto|o|ot S c|10|c0lS US l00.cS 4.71 Nk bbb |*
|b|S ll.cS ll|lS|c0lS US 7.cS lc.0 Nk b-
Kl|CO 8.8S l0|l|c0lc US ll1.l1 S.7c boo1 bbb
ACb 4.S l0|8|c0l4 US l0S.l1 1.0c Al A
NbA 4.cS 1|cS|c0lS US l04.S c.88 Ao1 A-
|r|rotes Nb |-4S0|rs 4|10|c0lc US l0c.cS l.81 A1 Nk
HSbC bor| || 1 l0|cl|c0lS US 77.l1 1.cc Al Nk
CbO S ll|l8|c0l4 US l0.00 c.8 Al A
Sou1| br|t|s| 1 ll|lc|c0lS US l00.18 c.7l Nk A
bbK 4.S l0|c8|c0lS US 78.l1 4.1 booc Nk
I550k P.0.k* Mk]0kI]Y 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
!lC 4.747 l0|cl|c0l4 US l0c.c1 c.80 Al AA
Alb 1.4S ll|4|c0lS US l0c.l1 1.cl Ac Nk
u|o| Covt c.17c ll|1|c0l4 US l0S.00 4.1 Nk Nk
l|C |-1.S|rs c|l1|c0lc US 74.S0 c.71 b1 b-
)A|/A |-l10|rs ll|c|c0lc A| 74.18 .Sl bc b
| Wor|1 c.cS |c|c0l US l04.cS S.40 boo1 bb
|roor 8.S 8|1|c0lc US l04.cS .4 Nk bb
kAK S.c17c l|c8|c0lc US l08.c1 1.l Nk A
or A| Ar|or l0.S c|l8|c0lS US l0c.l1 l0.0c Nk bb
1he HSBC/NASDAO Dubai Middle LasL 1oLal ReLurn
lndex Lracks Lhe LoLal reLurn ol an emerging 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
1he equiLy markeLs have experienced some
Lurbulence since Lhe iniLial proLesLs in LgypL. WhaL
is perhaps more inLeresLing is LhaL when we look aL
Lhe perlormance ol Lhe markeL we are preLLy much
back where we sLarLed in Lerms ol absoluLe levels.
1he markeL dipped rapidly as Lhe evenLs worsened,
buL Lhe acLions ol Lhe cenLral bank, and
inLernaLional markeLs, have seen iL recover Lo near
Lhe levels seen aL Lhe sLarL ol Lhe unresL. Ol course,
Lhis doesn'L mean LhaL Lhe markeLs are back Lo
normal. lnvesLors are currenLly locused on Lwo
Lhemes lower Lhan expecLed corporaLe earnings
in O2 and Lhe Lype ol sLock Lhey are holding. Many
have chosen Lo sell high beLa sLocks LhaL is, sLocks
LhaL reacL mosL Lo markeL volaLiliLy such as banks
and oLher linancial names, and insLead buy inLo
noncyclical sLocks such as Lelecoms and healLhcare
LhaL provide some securiLy away lrom Lhe unresL.
However, currenL low volumes caused by Lhe
summer lull have masked Lhis somewhaL and Lhe
Lrend is noL as pronounced as iL mighL well be. As
Lhe region looks Lowards Ramadan, iL's likely LhaL
acLiviLy will remain low wiLh invesLors choosing Lo
siL on Lheir cash lor Lhe meanLime.
BuL iL's noL all negaLive news and inacLiviLy. OaLar
and Lhe UAL recenLly lailed in Lheir aLLempL Lo
be included in Lhe MSCl Lmerging MarkeLs lndex
on Lwo specilic poinLs: Foreign Ownership Levels
(FOL) and Lhe adopLion ol Delivery vesus PaymenL
(DvP): a meLhod ol exchanging sLocks and lunds
simulLaneously which reduces risk lor invesLors.
WhaL was mosL noLable abouL Lhis was noL Lhe
lailure, buL Lhe lacL LhaL Lhe MSCl opLed Lo review
Lhe siLuaLion again aL Lhe end ol Lhe year, and even
gave a blueprinL lor success.
GEORGES ELHEDERY,
Head of global markets,
MENA, HSBC
lssued by HSBC Bank Middle LasL LimiLed. RegulaLed byJersey Financial Services
Commission. All ligures quoLed are sourced lrom Bloomberg and HSBC and are
correcL aL Lhe Lime ol publicaLion. PasL perlormance is an noL an accuraLe guide Lo Lhe
luLure. 1his inlormaLion is general and does noL Lake inLo accounL your circumsLances,
objecLives or needs. You should consider Lhese maLLers and consulL your linancial
advisor prior Lo making any invesLmenL decisions. For prolessional assisLance, conLacL
HSBC on 800 ^0 ^^^3.
*rer|o1|c 1|str||ut|or orourt
!41
!46
!45
!44
!43
!42
!4!
!40
!39
!38
!31
!829 kpr|| 20!! 23! May 20!! 230 Juae 20!! !!8 Ju|y 20!!
.)&AUCUS1 20
In association with
TOTAL RETURN INDEX
HSBC/NASDAQ DUBAI MIDDLE EAST
SOVERIGNS
CORPORATES
BANKS
SUKUK
A|u |o|| Covt S.S 4|8|c0l4 US ll0.44 l.SS Aoc AA
u|o| Covt c. l0|S|c0lS US l0S.18 S.cc Nk Nk
u|o| Covt .S l0|S|c0c0 US l0c.S0 c.7 Nk Nk
Ootor Covt 4 l|c0|c0lS US l0S.l7 c.44 Aoc AA
bo|ro|r Covt S.S 1|1l|c0c0 US 7.88 S.8l Nk bbb |*
|cvrt Covt S.S 4|c7|c0c0 US l0l.00 S.c0 bo1 bb
|orocco Covt 4.S l0|S|c0c0 |Uk 7l.S0 S.l Nk bbb
!oco 4.S 7|lS|c0l4 US l0S.S0 c.7l A1 Nk
A|1or l0.S S|c|c0l4 US ll0.88 c.S0 b1 b
u|o| Ho|1|rc |-1.S|rs c|l|c0lc US 7S.S0 7.1S b1 Nk
|WA c.1S l0|cl|c0lc US l04.cS S.41 boc Nk
Ote| 1.1S l0|l4|c0lc US l00.cS 1.1c Ac A
Ootor| |or S |cl|c0c0 US l01.88 4.4 Aoc AA
SAblC 1 ll|c|c0lS US l00.S0 c.8 Al A-
|urto|o|ot S c|10|c0lS US l00.cS 4.71 Nk bbb |*
|b|S ll.cS ll|lS|c0lS US 7.cS lc.0 Nk b-
Kl|CO 8.8S l0|l|c0lc US ll1.l1 S.7c boo1 bbb
ACb 4.S l0|8|c0l4 US l0S.l1 1.0c Al A
NbA 4.cS 1|cS|c0lS US l04.S c.88 Ao1 A-
|r|rotes Nb |-4S0|rs 4|10|c0lc US l0c.cS l.81 A1 Nk
HSbC bor| || 1 l0|cl|c0lS US 77.l1 1.cc Al Nk
CbO S ll|l8|c0l4 US l0.00 c.8 Al A
Sou1| br|t|s| 1 ll|lc|c0lS US l00.18 c.7l Nk A
bbK 4.S l0|c8|c0lS US 78.l1 4.1 booc Nk
I550k P.0.k* Mk]0kI]Y 00kkN0Y MI0 PkI0 YIL0 M000Y5 5&P
!lC 4.747 l0|cl|c0l4 US l0c.c1 c.80 Al AA
Alb 1.4S ll|4|c0lS US l0c.l1 1.cl Ac Nk
u|o| Covt c.17c ll|1|c0l4 US l0S.00 4.1 Nk Nk
l|C |-1.S|rs c|l1|c0lc US 74.S0 c.71 b1 b-
)A|/A |-l10|rs ll|c|c0lc A| 74.18 .Sl bc b
| Wor|1 c.cS |c|c0l US l04.cS S.40 boo1 bb
|roor 8.S 8|1|c0lc US l04.cS .4 Nk bb
kAK S.c17c l|c8|c0lc US l08.c1 1.l Nk A
or A| Ar|or l0.S c|l8|c0lS US l0c.l1 l0.0c Nk bb
1he HSBC/NASDAO Dubai Middle LasL 1oLal ReLurn
lndex Lracks Lhe LoLal reLurn ol an emerging 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
1he equiLy markeLs have experienced some
Lurbulence since Lhe iniLial proLesLs in LgypL. WhaL
is perhaps more inLeresLing is LhaL when we look aL
Lhe perlormance ol Lhe markeL we are preLLy much
back where we sLarLed in Lerms ol absoluLe levels.
1he markeL dipped rapidly as Lhe evenLs worsened,
buL Lhe acLions ol Lhe cenLral bank, and
inLernaLional markeLs, have seen iL recover Lo near
Lhe levels seen aL Lhe sLarL ol Lhe unresL. Ol course,
Lhis doesn'L mean LhaL Lhe markeLs are back Lo
normal. lnvesLors are currenLly locused on Lwo
Lhemes lower Lhan expecLed corporaLe earnings
in O2 and Lhe Lype ol sLock Lhey are holding. Many
have chosen Lo sell high beLa sLocks LhaL is, sLocks
LhaL reacL mosL Lo markeL volaLiliLy such as banks
and oLher linancial names, and insLead buy inLo
noncyclical sLocks such as Lelecoms and healLhcare
LhaL provide some securiLy away lrom Lhe unresL.
However, currenL low volumes caused by Lhe
summer lull have masked Lhis somewhaL and Lhe
Lrend is noL as pronounced as iL mighL well be. As
Lhe region looks Lowards Ramadan, iL's likely LhaL
acLiviLy will remain low wiLh invesLors choosing Lo
siL on Lheir cash lor Lhe meanLime.
BuL iL's noL all negaLive news and inacLiviLy. OaLar
and Lhe UAL recenLly lailed in Lheir aLLempL Lo
be included in Lhe MSCl Lmerging MarkeLs lndex
on Lwo specilic poinLs: Foreign Ownership Levels
(FOL) and Lhe adopLion ol Delivery vesus PaymenL
(DvP): a meLhod ol exchanging sLocks and lunds
simulLaneously which reduces risk lor invesLors.
WhaL was mosL noLable abouL Lhis was noL Lhe
lailure, buL Lhe lacL LhaL Lhe MSCl opLed Lo review
Lhe siLuaLion again aL Lhe end ol Lhe year, and even
gave a blueprinL lor success.
GEORGES ELHEDERY,
Head of global markets,
MENA, HSBC
lssued by HSBC Bank Middle LasL LimiLed. RegulaLed byJersey Financial Services
Commission. All ligures quoLed are sourced lrom Bloomberg and HSBC and are
correcL aL Lhe Lime ol publicaLion. PasL perlormance is an noL an accuraLe guide Lo Lhe
luLure. 1his inlormaLion is general and does noL Lake inLo accounL your circumsLances,
objecLives or needs. You should consider Lhese maLLers and consulL your linancial
advisor prior Lo making any invesLmenL decisions. For prolessional assisLance, conLacL
HSBC on 800 ^0 ^^^3.
*rer|o1|c 1|str||ut|or orourt
!41
!46
!45
!44
!43
!42
!4!
!40
!39
!38
!31
!829 kpr|| 20!! 23! May 20!! 230 Juae 20!! !!8 Ju|y 20!!
CULF BUSlNLSS&.*
FOOD AND DRINK
SECTOR ANALYSIS
:8K<>FIP GIF;L:K ;_jJ8C<J)'(' I8EB
r|e1 rrocesse1 foo1 k|ce l.4S |||||or l
Cor|orotes Co|o 840 r||||or c
Corfect|orerv C|oco|ote 8l r||||or 1
|ru|t|Veceto||e )u|ce l00 rer cert ju|ce c4c r||||or 4
bott|e1 Woter St||| |ott|e1 Woter Sl8 r||||or S
THE
RAMADAN
EFFECT
TOP FIVE
UNLOCKING POTENTIAL OF CARBONATES
SOURCL: LuromoniLor lnLernaLional, www. euromoniLor.com
Ramadan, which will span abouL 30 days
lrom Lhe beginning ol AugusL and ends
wiLh Lid Al FiLr, Lhe lesLival ol breaking
Lhe lasL, has a huge impacL on Muslim
consumer purchasing decisions around
Lhe world and in Lhe UAL. 1here is a
sLrong conLrasL beLween Lhe absLinence ol
Muslims by day and indulgence by nighL.
As soon as Lhe sun seLs, leasLs are dished
ouL. 1his indulgence is proving Lo be a
very lucraLive markeL.
Demand usually peaks a week or Lwo
belore Ramadan and conLinues Lo be high
LhroughouL Lhe monLh, peaking again
during Lid. During Lhis period, demand
lor lood and drink rises subsLanLially.
WhaL is inLeresLing is Lhe way in which
consumpLion habiLs shilL wiLh demand
rising lor parLicular producLs such as
concenLraLes, wiLh VimLo invesLing
heavily in adverLising during Lhis period.
Sales ol cerLain lood iLems such as nuLs,
dehydraLed soup, sLock cubes, cream
and evaporaLed milk also rise sharply
in Ramadan.
However, according Lo LuromoniLor
research, Lhe producL caLegory LhaL sees
Lhe highesL increase in demand during
Ramadan is conlecLionary as noL only do
people crave sugar when lasLing buL Lhey
Lend Lo buy conlecLionary when visiLing
lriends and relaLives during and alLer
llLar. 1his Lrend has been spoLLed by Lhe
main players in Lhe markeL including Mars
CCC and NesLle Middle LasL who locus on
Lailored adverLising lor Lheir
brands during Lhe monLh.
SANA TOUKAN
Research manager,
Euromonitor
CarbonaLed drinks regisLer LoLal volume growLh ol Lhree per cenL and LoLal volume
sales ol 562 million liLres in 200 in Lhe UAL alone wiLh Dubai RelreshmenLs Co
conLinuing Lo lead wiLh an ollLrade volume share ol ^8 per cenL in Lhe UAL.
Large price increases, making up lor many years ol consLanL prices in Saudi
Arabia, have driven decline in Lhe KSA markeL.
ColaCola and PepsiCo have been quick Lo recognise Lhe luLure poLenLial ol Lhe
Middle LasL and Alrica. CocaCola is Lrying Lo duplicaLe Lhe success iL experienced
in LaLin America by developing Lhis markeL early. However, PepsiCo recognised
Lhe volume poLenLial ol Middle LasL/Alrica much earlier in Lhe cycle Lhan iL did lor
LaLin America.
1he Middle LasL and Alrica has Lhe youngesL populaLion ol all Lhe world's regions.
BeLween 980 and 2020, Lhe Middle LasL and Alrica will add almosL 9^7 million
people, pushing iLs LoLal populaLion Lo more Lhan .5 billion by Lhe end ol Lhe
^0year period. 1he Middle LasL and Alrica is Lhe only region wiLh growLh aL all
ages, and also Lhe only region wiLh Lhe mosL projecLed growLh in age brackeLs
below ^0 years.
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HIGHEST SPEND CATEGORIES IN THE UAE
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T
HE CEILING OF our hotel room is decorated with white
plaster flowers and bows. Its exquisite, like a Wedgewood
vase. Suite four was once a reception room for whichever wealthy
18th-century family had rented this house in the Royal Crescent.
In Jane Austens day, it was traditional for families to come to
Bath in October and stay for the winter season right through to
May. Jane would not have been able to live here, however. In her
day, No. 16 Royal Crescent was the holiday home of the Duke of
York and then the Prince Regent. I wont be able to stay long here
myself. This is now the site of the most expensive hotel in Bath
and modern royalty, comedian John Cleese, lives next door.
AT HOME WITH JANE AUSTEN
Bath has always had a special cachet, long before they started
filming Jane Austens novels here. The city we know today was
built by John Wood the Elder, who wanted to create Italian
piazzas and neo-classical streetscapes in a new streamlined city
that would rival London for sophistication and affluence. He
and his son succeeded in putting Bath on the map. Writers like
Samuel Johnson, military heroes like Lord Nelson and politicians
such as William Pitt the Younger flocked here. Not to mention
royalty. Bath in the late 18th and early 19th century was Britains
alternative capital city.
I learn this from Thomas Powe who greets my wife and I
;FNEK@D<
1RAVLL, S1YLL, CRUlSL, BY1LS, HO1LLS & SCLNL
Ibe Rova| Crescert, Batb,
W|tb Iboas PoWe, I8tb
certurv tour ou|de
(ard tbe autbor's W|fe)
74-75 Downtime Travel.indd 74 7/25/11 11:00:16 AM
>LC=9LJ@E<JJ&.,
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Ibe b|obest terrace |r Jare Auster's Batb ard tbe
boe of tbe L||ot fa||v |r Persuas|or. Arre L||ot's
srobb|sb fatber, S|r Wa|ter, Was ab|e to |oo| doWr
or tbe rest of tbe c|tv fro up bere. Bu||t ou|c||v
ard W|tbout so||d fourdat|ors, Cader Crescert
Was rever cop|eted.
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S|tuated |r a ta|| toWr bouse |r av Street, tbe
certre offers ar exb|b|t|or about Jare's t|e |r
Batb ard a|so oroar|ses tbe arrua| Jare Auster
L|terarv fest|va| ard a Reoercv Ba|| everv Ju|v.
Ibe o|ft sbop se||s boo|s, DVDs, per|od jeWe||erv
ard "| Love Nr Darcv tsb|rts".
K_\Xki\IfpXc
Jare Auster freouerted botb of Batb's Ibeatres
Rova| ard set sceres fro Nortbaroer Abbev |r
tbe o|d tbeatre ard Persuas|or |r tbe reW. Ibe
reW tbeatre opered |r I805 ard st||| furct|ors
todav. |r Jare's t|e |t bad tb|s spec|a| ertrarce |r
Bedford Souare for Wea|tbv tbeatreooers.
outside the hotels marble lobby. Thomas
is a guide to the city who goes one
step further by dressing in 18th-century
costume and carrying a silver-knobbed
walking stick. The three of us step out
along the wide pavement built so that
two couples, the ladies in full skirts,
could pass and admire each other.
Thomas shows us a yellow door in the
otherwise white-doored crescent, which
Jane Austen mentions in one of her
novels, and Royal Victoria Park in front
of the crescent where so many British
movies have been filmed. This park,
with its bandstands and bowling greens,
was just fields in Janes time but it has
featured in adaptations of two of her
novels, Persuasion and Northanger Abbey,
as well as Vanity Fair, Joseph Andrews
and The Duchess. The traditional Gilbert
Scott telephone box on the edge of the
park has been permanently painted grey
because its been in the background of
so many shots.
From here Thomas takes us down the
Gravel Walk to a Georgian garden that
has been reconstructed recently to show
us the relative simplicity and formality of
Janes time. You see the beds of lavender
that line the path? he tells my wife.
Thats so that as the ladies brushed by
their skirts would pick up the scent of
lavender. We emerge on Gay Street
where Jane herself lived at No. 25 as did
one of my favourite fictional characters,
Admiral Croft in Persuasion.
Its a beautiful day as we descend
to Queen Square. Georgian Bath, the
Bath of Jane Austen, is built on steeply
sloping hills above the old Roman
and medieval city. John Wood levelled
some of these slopes to create the Royal
Crescent and his supreme achievement,
the Circus, a Palladian circle of houses,
completed in 1768. Its like had never
been seen before in Britain.
In Queen Square, Thomas shows us
Woods own house, which looks like a
Renaissance palace occupying the whole
north side of the square. Jane lived
opposite at No. 13.
That was when she first visited Bath
in 1799, says Thomas.
No plaque, I point out.
Thomas sighs. So many buildings
in Bath are associated with Jane. Youd
have to cover the city!
The Royal Crescent Hotel can be
booked through Relais & Chteaux
(00800 2000 0002; www.relaischateaux.
com). Rooms from 345 per night (price
includes breakfast)
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74-75 Downtime Travel.indd 75 7/25/11 11:00:20 AM
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CHAMPAGNE SUPERNOVA
I
F MASERATIS QUATTROPORTE
GTS Awards Edition and I had been
introduced 20 years ago, as I was
beginning my motoring life, we probably
wouldnt have got on. Purely through
my own immaturity, you understand. My
gauche, inexperienced self of 19 wouldnt
have understood what a magnificent
achievement the Quattroporte really is.
I would have just seen four doors and
walked away, muttering about proper
sports cars. Luckily, my current 39-year
old self appreciates its air of low-key
elegance. It is simply delightful to look
at an almost subliminal beauty. It is not
an obvious car, and thats one of its many
attractions. Understatement and muted
sophistication instead of brashness,
spoilers and go-faster stripes.
The Awards Edition I tested is
the newest iteration of the 4.7-litre
Quattroporte GTS, and was built to
celebrate the 56 awards the car has
gleaned since it first launched six years
ago. Sat in the bright sunlight, it looks
like it means business. The glorious
Quarzo fuso (pearlescent grey, imbued
K<OK9PE@:B:FFG<I
with a golden hue very champagne-
esque) paintwork, black Trident alloys,
triple side vents and huge air-gulping
grille at the front provide the visual
excitement. The four seats, comfortable
leather and Alcantara interior provide
the physical comfort. And thats the
essence of why I love this car. It is two
cars in one.
The reason is largely down to the
presence of the Sport button on the
dashboard. If you wish to commute to the
office quickly and comfortably, without
adrenaline pumping through the veins,
de-select Sport and drive in automatic.
If you wish to get in touch with your
inner 10-year-old and overtake a line of
dawdlers to the Quattraportes Formula 1
soundtrack, give the button a quick press
and select manual. The difference is
incredible. The twin-exhausts sound like
nothing else when youre blipping up and
down the six-speed ZF gearbox with the
paddle selectors, an aural symphony of
burbles, roars and growls that never, ever
gets old. No matter how many tunnels
you drive through.
At times, its easy to forget about
the two additional back seats. From
the drivers position, it sits low on the
road and handles like other Italian two-
seaters. You can treat it like a car half
its size when youre navigating the
citys treacherous highways as theres
bags of power and grip to get you out of
any tough spots. If I had to choose one
criticism at gunpoint thats how much I
loved it it would be that the siren song
of the exhaust is too bewitching and that
if I did have the money to buy one, my
driving licence would not be long for this
world. It doesnt like legal speed limits
and tries at every occasion to seduce you
into one more upwards gearchange. The
sight of Neptunes trident on the steering
wheel brings out the devil in me.
It is one of those rare cars that come
along once in a while that it never failed
to raise a smile when I drove it. Not
one of those smug, self-satisfied ones I
normally have when Im pretending to
be a millionaire playboy for this column,
but one that was totally unselfconscious
and genuine. The overall feel of the
Quattroporte GTS is difficult to articulate.
Its just right. Looks right, sounds right
and drives right. A truly worthy addition
to Maseratis much-loved stable.
DFKFI@E>;FNEK@D<
77 Downtime-Maserati.indd 77 7/25/11 11:02:17 AM
The jdXik\i business kiXm\cc\i%%%
Yes, we know you mean business, but there is no reason you should be uncomIortable. Businesstravellerme.com provides indepth inIormation on where to
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Businesstravellerme.com The onestop resource Ior business travellers in the Middle East.
BTMEMECOM_Gulf business Ad.indd 1 7/27/11 2:10:48 PM
>LC=9LJ@E<JJ&..
DXj\iXk`je\n\jkX[[`k`fekf`kjHlXkkifgfik\`j[`jZi\\kcpdXê`Z\ek%
CHAMPAGNE SUPERNOVA
I
F MASERATIS QUATTROPORTE
GTS Awards Edition and I had been
introduced 20 years ago, as I was
beginning my motoring life, we probably
wouldnt have got on. Purely through
my own immaturity, you understand. My
gauche, inexperienced self of 19 wouldnt
have understood what a magnificent
achievement the Quattroporte really is.
I would have just seen four doors and
walked away, muttering about proper
sports cars. Luckily, my current 39-year
old self appreciates its air of low-key
elegance. It is simply delightful to look
at an almost subliminal beauty. It is not
an obvious car, and thats one of its many
attractions. Understatement and muted
sophistication instead of brashness,
spoilers and go-faster stripes.
The Awards Edition I tested is
the newest iteration of the 4.7-litre
Quattroporte GTS, and was built to
celebrate the 56 awards the car has
gleaned since it first launched six years
ago. Sat in the bright sunlight, it looks
like it means business. The glorious
Quarzo fuso (pearlescent grey, imbued
K<OK9PE@:B:FFG<I
with a golden hue very champagne-
esque) paintwork, black Trident alloys,
triple side vents and huge air-gulping
grille at the front provide the visual
excitement. The four seats, comfortable
leather and Alcantara interior provide
the physical comfort. And thats the
essence of why I love this car. It is two
cars in one.
The reason is largely down to the
presence of the Sport button on the
dashboard. If you wish to commute to the
office quickly and comfortably, without
adrenaline pumping through the veins,
de-select Sport and drive in automatic.
If you wish to get in touch with your
inner 10-year-old and overtake a line of
dawdlers to the Quattraportes Formula 1
soundtrack, give the button a quick press
and select manual. The difference is
incredible. The twin-exhausts sound like
nothing else when youre blipping up and
down the six-speed ZF gearbox with the
paddle selectors, an aural symphony of
burbles, roars and growls that never, ever
gets old. No matter how many tunnels
you drive through.
At times, its easy to forget about
the two additional back seats. From
the drivers position, it sits low on the
road and handles like other Italian two-
seaters. You can treat it like a car half
its size when youre navigating the
citys treacherous highways as theres
bags of power and grip to get you out of
any tough spots. If I had to choose one
criticism at gunpoint thats how much I
loved it it would be that the siren song
of the exhaust is too bewitching and that
if I did have the money to buy one, my
driving licence would not be long for this
world. It doesnt like legal speed limits
and tries at every occasion to seduce you
into one more upwards gearchange. The
sight of Neptunes trident on the steering
wheel brings out the devil in me.
It is one of those rare cars that come
along once in a while that it never failed
to raise a smile when I drove it. Not
one of those smug, self-satisfied ones I
normally have when Im pretending to
be a millionaire playboy for this column,
but one that was totally unselfconscious
and genuine. The overall feel of the
Quattroporte GTS is difficult to articulate.
Its just right. Looks right, sounds right
and drives right. A truly worthy addition
to Maseratis much-loved stable.
DFKFI@E>;FNEK@D<
77 Downtime-Maserati.indd 77 7/25/11 11:02:17 AM
C
M
Y
CM
MY
CY
CMY
K
Ad_back to school Gulf Business & Whats On_GG.pdf 7/18/11 12:18:12 PM
>LC=9LJ@E<JJ&.0
GC8:<JKF9<;FNEK@D<
A
S THE SOARING Gulf temperature takes its
toll, dont despair; you can still chill out
at the luxurious Banyan Tree Al Wadi a new
addition to the Arabian Desert. A 45-minute
drive from Dubai International Airport and
a 20-minute drive from Ras Al Khaimah city
centre, the resort has not only become a popular
destination for quiet weekend getaways but has
developed as an attractive place to do business
and entertain friends in style.
Set within a wildlife-rich nature reserve
stretching over 100 hectares and enclosed in a
protected enclave of the evergreen ghaf tree, the
desert resort is made for taking in the classic
views of the golden sand dunes and desert
greenery. The Arabesque-inspired villas styled in
a mix of the traditional and modern each house
their own secluded pool. At Banyan Tree, the
choices are tough: you can relax lying in the sun
on the pool-deck or get pampered at the resorts
Ia|e vour co||eaoues out for a
trad|t|ora| |ftar at tbe Atospbere
restaurart or |eve| I22 of tbe Wor|d's
ta||est bu||d|ro, Burj Kba||fa |r
otber Words, tbe Wor|d's b|obest
p|ace to d|re. Ibe ever|ro's feast
beo|rs at surset, W|tb ezze ard
trad|t|ora| L|rat| d|sbes set aoa|rst
tbe o||tter|ro parora|c v|eWs of tbe
c|tv be|oW.
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Natbaf: Arab Nuseu of Noderr Art
preserts a ur|oue cbarce to exp|ore
tbe deve|opert of oderr art |r
0atar tbrouob tb|s exb|b|t|or t|t|ed
'SWa||f' ear|ro fr|erd|v, |rfora|
corversat|or ard recourt|ro of
stor|es. Ibe exb|b|t|or features
ore tbar I5 artWor|s dep|ct|ro
tbe deve|opert of tbe v|sua| arts
|r 0atar fro tbe I960s to tbe ear|v
2000s |r a var|etv of ed|a, |rc|ud|ro
o|| pa|rt, Waterco|our, pr|rt, cera|cs,
Wood ard |xed ed|a. Ibe exb|b|t|or
rurs fro I4 Auoust to 29 0ctober.
hdX%Zfd%hX
Sator| Spa at Bab A| Sbas Desert
Resort |s offer|ro a spec|a| Suer
Retreat pac|aoe tbat |rcudes a
50|rute bodv assaoe, tWocourse
|urcb, vooa sess|or, access to tbe poo|
ard spa fac|||t|es, p|us |aWr oaes,
cae| r|des, vo||ev ba|| ard a fa|cor
sboW. for Dbs 590.
d\p[Xe_fk\cj%Zfd&YXYXcj_Xdj
Urt|| 2I Auoust, At|art|s |s offer|ro tbe
U|t|ate Auoust coup|e's pac|aoe. Ibe
suer |rdu|oerce pac|aoe at Dbs
2,I35 |rc|udes ore r|obt |r a de|uxe
roo, food ard beveraoe at Nobu
restaurart, Do|pb|r Lrcourter for
tWo, brea|fast for tWo, pred|rrer
dr|r|s for tWo as We|| as ur|||ted
access to Ibe Lost Cbabers ard
Aouaverture Waterpar|.
XkcXek`jk_\gXcd%Zfd
Ibe Arab|ar Rarcbes o|f C|ub |s
offer|ro free re|or to p|av as arv
bo|es as vou |||e fro Surdavs to
Wedresdavs tb|s ortb. for tbose
Wbo Wart to perfect tbe|r sW|ro,
pav Dbs 60 for ur|||ted ba||s at tbe
dr|v|ro raroe. Pr|ces raroe fro Dbs
I45 for c|ub ebers to Dbs 255
for orebers. |t's a|ost Wortb
sWeat|ro for.
XiXY`XeiXeZ_\j^fc][lYX`%Zfd
sprawling 3,960-square-metre Asian-inspired
hydrotherapy spa.
The resort also provides outdoor activities to
enjoy with family and friends. From the comfort
of your villa youll discover that the natural
landscape is hearing with wildlife. Guides can
take you to spots where you can view exquisite
birds such as the Indian roller, blue-cheeked
bee-eater and the Arabian babbler that are easy
to spot in the area.
For the more energetic, the resort can arrange
to sail you in a traditional dhow to their
brand new Beach Club comprising of 32 chic
beachfront-villas. The club offers a wide range
of water sport facilities ranging from sailing,
wind surfing and jet skiing. Golf enthusiasts
and corporate guests will be pleased to find that
the18-hole championship Al Hamra Golf Club is
just a stones throw from the club.
banyantree.com
RELAXED IN RAK
K<OK9P?@C;8;JFLQ8
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79 Downtime Place to Be.indd 79 7/25/11 11:02:56 AM
/'&AUCUS1 20
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T
HE EVENT HAS become a major
attraction with large corporate houses
looking to boost their sales during this
time of the year. Supported by a heavy
marketing campaign, the fair attracts
visitors from far and wide flocking to the
capital to experience UAEs largest multi-
product consumer fair. The event features
an impressive presence of international
leading retailers showcasing a variety of
products from their country. The stalls
display a wide-range of products such as
household goods, electronics, furniture,
garments, footwear, gift items and
jewellery from China, Turkey, Italy,
Indian, Pakistan, Singapore, and Malaysia
besides the UAE.
The exhibition is open from 20:00 to
3:00. The entry fee is Dhs 10 for adults.
RAMADAN & EID FESTIVAL
K<OK9P?@C;8;JFLQ8
81 Calendar August 2011.indd 81 7/25/11 1:44:31 PM
/) & AUCUS1 20
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M
ARINA DIAZ AND her husband often found themselves
in places where there was nothing exciting to drink.
Especially at non-licensed joints or shisha cafes. Wouldnt it
be great if there was a drink that could relax us that was non-
alcoholic? So we hit on the idea of a drink that relaxed the
mind but not the body; a drink that could be part of a social
ritual but could also be consumed by Muslims, says Diaz, who
is co-founder of Piper drinks, along with her husband, Jeremy,
and three other partners.
Jeremy hails from New Zealand, where the product was
trialled and developed over the last three years. The co-founder
says there has been a movement away from alcohol in many
countries across the world, including Australia and New
Zealand, where consumption of beer has dropped every year for
the last four years.
We are learning more about our target market originally
we thought it would be Arabs and ex-pats in unlicensed venues
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NATURAL HIGH
looking to recreate the socialising factor that you have in
licensed bars and restaurants. As it turns out there is a lot
more to it than that there is a whole sea-change away from
alcohol and any high vice products, says Diaz.
We found a lot of people want to spend time with friends
but they dont want to drink soft drinks as its just sugar and
water and a lot of negative health issues. We are also targeting
the righteous consumer, people who want to go and meet
friends but dont want to drink a beer doing it because theyve
just spent an hour in the gym. So locally you have people that
arent drinking for religious reasons, health reasons and the
fact that people are working longer hours than ever before and
dont want alcohol to affect their performance.
Pipers ingredients are just fruit and water, with no
sweeteners or artificial flavours and preservatives. The active
ingredient is lemon balm, supported by passion flower.
Lemon balm is a slightly relaxant herb, but it has more of a
mood booster effect than a tranquilising result. The founders
wanted to formulate a beverage that emulates the social glue
and camaraderie that is normally associated with the one
glass of wine after work effect the aaaah moment.
Its basically putting people in a good mood and getting
rid of their worries and their cares. We wanted to replicate
the natural high of a holiday. You could drink two or three,
and you would just feel good, says Diaz. Hundreds of years
ago, lemon balm was widely used in wine, in water and in
candles to relax your mind. It was so successful that it fell out
of favour over being too widely used and weve decided to
bring it back.
Piper has already been given a soft launch, with the slick-
looking silver and purple cans now available in UAE bars,
restaurants and cafes including the Armani hotel. The Diazs
have trucked in 50,000 cans from New Zealand for the big
launch that will come just after the Ramadan period. The
drink, which tastes like fresh carbonated Ribena on ice, will
cost around Dhs6 in local supermarkets. Piper also aims to
target petrol stations and convenience stores in the UAE, before
moving onto the GCC and wider Europe.
To a degree, Piper lowers inhibitions but without
intoxicating you. Crucially, it affects the mind but not the
bodys motor system. Theres a lot of cynicism about these
drinks, but it has a proven scientific effect. We are not a
multinational looking to manipulate people through advertising.
Were the real deal, says Diaz.
WL ARL 1ARCL1lNC 1HL
'RlCH1LOUS CONSUMLR',
PLOPLL WHO WAN1 1O
MLL1 FRlLNDS BU1 DON'1
WAN1 ALCOHOL.
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82 In Your Shoes.indd 82 7/25/11 11:07:53 AM
With AF-S DX VR 18-55mm f/3.5-5.6G
ABU DHABI: Abu Dhabi Mall - Tel: 02 6451115, Central Souq Digital 02-6278617, Dalma Mall Digital 02-5503061, Khalidiya - Tel: 02 6312100, Marina Mall - Tel: 02 6817817,
AL AIN: Al Ain Mall - Tel: 03 7515551, DUBAI: Bur Juman Centre - Tel: 04 3523641, Deira City Centre - Tel: 04 2943070, Dubai Festival City - Tel: 04 2329391, Dubai Outlet Mall -
Tel: 04 4264922, Dubai Mall - Tel: 04 3398915, Dubai Mall - Tel: 04 3398614, Dubai Marina Mall - Tel: 04 4342540, Ibn Battuta Mall - Tel: 04 3685353, Maktoum Street -
Tel: 04 2213700, Mall of the Emirates - Tel: 04 3414555, Mirdi City Centre - Tel: 04 2843055, Image Arts - Garhoud - Tel: 04 2868010, SHARJAH: Mega Mall - Tel: 06 5746341
Email: photography@grandstores.ae www.grandstoresuae.com

Gulf Business - August 2011

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