â€śFuture of MENAâ€ť gathers regionâ€™s experts to tackle issues in GCC strategic visions, macroeconomics
Topics discussed included new champions of globalisation, regional IPO pipeline, oil prices, and the interplay between government directives and the private sector.
On the side-lines of celebrating Thomson Reuters’ 150th anniversary in MENA, government and business leaders gathered in Dubai International Financial Centre to kick off an exclusive three-day seminar series.
In his opening remarks, Nadim Najjar, Managing Director, MENA, Thomson Reuters said, “The Middle East sits at the crossroads of the world- for a millennia. It has welcomed people from every continent, taking on new traditions, building on the foundations of knowledge and innovating with technology to develop into a region, and Thomson Reuters was there at each step along the way, which makes this event much more than just an anniversary.”
Outlook for Finance
In the session moderated by Reuters’ Middle East Correspondent, Tom Arnold, the impressive panel discussed the outlook for finance in MENA with respect to low oil prices, the role of banks, private equity firms and government funds and hotspots for the coming year or two.
Karim El Solh, CEO of Gulf Capital, responded to a question on large privately held companies and their IPO ambitions. He believes only when big names like Aramco go public will we expect to see a herd mentality come into effect. So from late 2018 onwards you can expect to see a lot of IPO activity.
Georges Elhedrey, CEO of HSBC MENA, stated that some level of government debt combined with fiscal planning is healthy. Lately, banks have been experiencing difficulties related to capacity constraints as they finance fiscal deficit, capital projects combined with regulations for increasing capital serves, severely strains bank liquidity. Debt capital markets relieve some of this strain from the banks.
Richad Soundardjee, Middle East Chief Executive of Societe Generale, further supported this point by stating how the investor base in the region has widened over time and is one that can be tapped on a regular basis. Private sector corporates have managed to meet demand at very attractive levels and can continue to do so moving forward.
The session closed with the panel agreeing that two exciting areas for the Middle East marketplace are the consumer and technology industries. Commenting on Amazon’s recent acquisition of Souq.com, the panel unanimously agreed the deal was an indication of confidence in the region’s talent, business ecosystems and growth potential.
Lastly, El Solh, expressed his concern with traditional retailers such as grocers and electronics. He believes every retailer should respond by reformatting its operating model using technology in the day-to-day running of their businesses—or prepare to be on the negative receiving end of this trend.
In this session, Nasser Saidi, President at Nasser Saidi & Associates explained that China and Asia are now the champions of globalisation, and the number one trading partners with the GCC. It is no longer Europe and the US that we only need to be keeping in mind. As a result of that, we need to be more aware of what is happening in Asia, as that will have implications on oil prices and other factors in our part of the world.
“Growth in China is rebalancing, shifting away from energy-intensive industries towards light service industries. We can see this being reflected in oil prices. OPEC is no longer the determinant of oil prices. It is shale oil and gas that will determine the future of oil prices. As soon as you hit 40-50 dollars SG companies come back online. The GCC will continue to be the driver of the region’s economic growth, but we need to set up a Middle East post-war re-construction bank for finance development. The main three MENA/GCC risks on the medium-term are economic non-diversification, lower oil/energy prices, and geopolitical tensions,” said Dr. Saidi.
Saidi identified six main drivers for the region moving forward: post-war reconstruction, demographics driven initiatives (smart cities/urbanisation), leveraging GCC assets (infrastructure/ transport/integrating into the new silk road), the new oil norm, decarbonisation, and a knowledge based economy (fintech/robotics/nanotech).
The GCC Vision
In a session moderated by Dr. Saidi, the discussion centred around how the Gulf states are pushing the boundaries of social, economic and technological development with their ambitious economic plans and how businesses in the Middle East can and should respond.
Yaser AbuShaban, Principal at Mercer Wealth, commented on how well the UAE has been able to attract and retain talented individuals from all over the world. This has been consolidated by enabling initiatives such as wide-spread ownership of property and long-term residencies. Looking ahead, he sees the potential for other initiatives such as providing saving schemes will allow businesses to feel anchored and stay in the region for longer.
Faisal Mokadem, Advisor to the UAE Federal Competitiveness and Statistics Authority, discussed how we are in a new era where we cannot count on oil revenues, and therefore governments are coming up with new frameworks, such as the UAE and its 2020 vision which is set to the right framework where the private sector will play a bigger role.
Rafiuddin Shikoh, CEO and Managing Director of DinarStandard, believes there is currently a disconnect between government directives and what the private sector is plugging into. Therefore, there is opportunity for the GCC private sector, such as developing the agriculture sector of the region, particular with respect to new innovations in desert agriculture.