Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
MENATalks: Spotlight on the UAE – Growth of Asset Management Landscape in MENAT
39 Plays2 years ago
The Middle East, North Africa & Türkiye (MENAT) has experienced phenomenal growth in the past few years, including the asset management industry and the recent expansion of hedge fund activity in the region. Listen as Patrick George, Global Head of Markets & Securities Services, HSBC and Mohamed Al Marzooqi, UAE CEO, HSBC, discuss with Matt Kiraly, HSBC’s Global Co-Head of Platform Solutions and Head of ESG Sales, Americas, the recent developments in the MENAT region’s financial industry in part 2 of our Spotlight on the UAE – Platform Solutions Podcast Series.
Hosted on Acast. See acast.com/privacy for more information.
Recommended
Transcript
Introduction to HSBC Global Viewpoint and MENA Talks
00:00:00
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:12
Speaker
Make sure you're subscribed to stay up to date with new episodes.
00:00:15
Speaker
Thanks for listening.
00:00:15
Speaker
And now onto today's show.
00:00:22
Speaker
Welcome to the latest in our MENA Talks podcast series.
00:00:26
Speaker
We are featuring a variety of different topics that are currently trending in the MENA region.
00:00:31
Speaker
We now explore the growth of asset management landscape in MENA.
MENA Region's Asset Management Growth
00:00:36
Speaker
Introducing the topic is HSBC's Global Co-Head of Platform Solutions and Head of ESG Sales Americas, Matt Corrali.
00:00:44
Speaker
Matt, over to you.
00:00:46
Speaker
Thank you, Gabriella.
00:00:48
Speaker
Today, I'm joined by Patrick George, Global Head of Markets and Security Services, and Mohamed Almarazouki, CEO of UAE at HSBC, to discuss recent developments in the asset management industry across the Middle East, as well as the recent expansion of hedge fund activity in the region.
00:01:05
Speaker
Patrick, Mohamed, hello.
00:01:07
Speaker
Pleasure speaking with you today.
00:01:09
Speaker
To kick things off, Patrick Mohamed, as you have witnessed, Mina has experienced phenomenal growth in the past few years in just about every sector, including the asset management industry.
Economic Growth in MENA Region: Factors and Reforms
00:01:21
Speaker
Can you please characterize this growth and describe the policies which have been implemented to attract it?
00:01:28
Speaker
Look, it is a result of, I would say, many things.
00:01:31
Speaker
Macroeconomic and geopolitical factors have definitely driven this growth.
00:01:36
Speaker
After the pandemic, the region and more specifically the UAE opened very early.
00:01:41
Speaker
They witnessed a surge in economic momentum.
00:01:44
Speaker
On the top of that, you have to add the massive gain in energy prices.
00:01:48
Speaker
On the top of that, the geopolitical, I mean, the UAE and the Gulf have a very good advantage location.
00:01:55
Speaker
You cannot see the increase in trade corridor and investment corridor we are witnessing between Asia Pacific and the Gulf, between China and the Gulf.
00:02:04
Speaker
And it's not just China.
00:02:05
Speaker
It's China, India, all the ASEAN country.
00:02:08
Speaker
On the top of that, there is also the structural reform.
00:02:10
Speaker
You look at the UAE, they massively invested in infrastructure over so many years.
00:02:15
Speaker
You look at Saudi Arabia with Vision 2030.
00:02:18
Speaker
All those are behind that growth, but I leave it to Mohammed to expand more on this topic.
00:02:23
Speaker
I agree with everything Patrick has just said.
00:02:26
Speaker
UAE
UAE's Transformation into a Global Hub
00:02:26
Speaker
is my home and what we have achieved is incredible.
00:02:31
Speaker
The country is only 52 years old and the scale of change in my lifetime has been massive.
00:02:38
Speaker
A few examples to share.
00:02:40
Speaker
We've gone from having no stock market to being one of the world's top five listing venues.
00:02:46
Speaker
We've gone from one highway to a country where the skyline is recognized globally.
00:02:53
Speaker
The UAE is a global hub because it has had a clear vision and a strong leadership.
00:03:01
Speaker
Think about the investments made in infrastructure for travel, tourism and trade.
00:03:06
Speaker
And now we see the same investment in technology.
00:03:11
Speaker
The most recent changes to visa rules, to the weekend days and the creation of free trade zones
00:03:18
Speaker
have all helped to reinforce the reputation of the UAE as a global hub for business and investment.
00:03:26
Speaker
Take all of this together and it is clear to see why talent is flocking to this market and why investment managers, including us at HSBC, are making the UAE a focus of international wealth management.
00:03:43
Speaker
Patrick Muhammad, thank you for that.
00:03:45
Speaker
It's absolutely fascinating and very exciting to see the pace of growth.
Investment Opportunities in MENA
00:03:49
Speaker
As a result of all these positive structural changes, how do you think this is impacting the investment landscape in the Middle East?
00:03:57
Speaker
It is making the story here even more compelling.
00:04:00
Speaker
And we all know that investors are always looking for a good story.
00:04:06
Speaker
There have been 13 new IPOs since the start of last year and close to $17 billion of capital has been raised.
00:04:15
Speaker
This has opened the door to investors who had never thought about the Middle East before.
00:04:21
Speaker
We have worked on 85% of the IPOs by deal value in the UAE.
00:04:27
Speaker
No other bank can give clients access to new listings like we can.
00:04:32
Speaker
And what's exciting about all of this is that the fundamentals of this market are strong and this recent surge is the start of something more long-term.
00:04:44
Speaker
I guess the question is why?
00:04:47
Speaker
because what we are seeing is the result of careful planning, strong leadership, and clear vision.
00:04:55
Speaker
Labor market reforms, free access to trade and capital flows, corporate ownership rules, the digital economy, they all make the UAE a great place to do business.
00:05:08
Speaker
So what you have in the UAE is a stable, reliable, low tax location.
00:05:15
Speaker
And that is a very favorable backdrop for the asset management industry, especially one that has natural support from sovereign wealth funds and a rising number of homegrown asset managers which compete alongside international firms.
00:05:35
Speaker
Look, the MENA region is definitely becoming more interesting as an investment region.
00:05:40
Speaker
And just to put things into context, in the past we used to see Western investors coming to the Gulf to source funding for their project.
00:05:48
Speaker
Now the things have turned.
00:05:50
Speaker
Now what we're seeing is Western investors going to the region because there is growth potential in the region.
00:05:56
Speaker
They want to invest in the region.
00:05:57
Speaker
They want to invest in the Gulf.
00:05:59
Speaker
And if you look at foreign direct investment into Saudi and UAE, they did hit record high with $40 billion in 2022.
00:06:06
Speaker
And we expect this to continue in 2023.
00:06:09
Speaker
Saudi Arabia, the UAE, Kuwait and Qatar are now all listed emerging market indices.
00:06:15
Speaker
They are all included in the MSCI emerging market indices.
00:06:20
Speaker
Bahrain and Oman are implementing market reform that will also allow them to become included in the future.
00:06:26
Speaker
And again, that didn't happen by accident.
00:06:28
Speaker
This is on the back of major structural reform in the financial services.
00:06:33
Speaker
We look at infrastructure changes across the region, such as the post-trade transformation program in Saudi Arabia, the multi-phase market development program in Kuwait, the introduction of centred clearing counterparties in a number of markets,
00:06:46
Speaker
All those are contributing to the growth of the financial market in the region.
00:06:51
Speaker
Patrick Mohamed, thank you for that.
00:06:53
Speaker
You touched on it briefly.
00:06:55
Speaker
Given our long history in the region, can you elaborate further on what we are doing to facilitate the growth in the region and support not only our local but also our global climate base?
HSBC's Historical and Ongoing Role in the MENA Region
00:07:05
Speaker
HSBC's heritage in this market and the role we've been privileged to play in the nation's economic growth and development is unique.
00:07:14
Speaker
Our story goes hand in hand with the UAE.
00:07:18
Speaker
We were the only bank operating here when we opened our doors for business in 1946.
00:07:24
Speaker
We saw the opportunity to invest and we've been investing ever since.
00:07:29
Speaker
Go back 70 years, we helped finance the dredging of Dubai Creek.
00:07:34
Speaker
That was a key step in UAE becoming a global container shipping hub.
00:07:41
Speaker
Last year, we were the number one global coordinator for the IPO market in the UAE.
00:07:47
Speaker
In fact, we were the only bank in two decades to have ended successive years as number one on both equity and debt capital markets league tables in the Middle East.
00:08:00
Speaker
So really, everything that we do is about supporting our clients by delivering on our purpose, which is opening up a world of opportunity.
00:08:12
Speaker
And no bank does that better than HSBC because our international network covers more than 90% of global GDP, trade and financial flows.
00:08:24
Speaker
It puts us at the heart of the most exciting growth and investment prospects in the world.
00:08:33
Speaker
I concur with Mohamed.
00:08:34
Speaker
We've been there in the region for decades, but guess what?
00:08:38
Speaker
We will keep adding resources because it's important and because we believe in the growth of the region.
00:08:43
Speaker
Yes, in ECM, we were ranked number one last year, and we are on the ticket of many IPOs.
00:08:49
Speaker
This year it's been a bit slower, but I have no doubt that it will come back again and the pipeline is extremely strong.
00:08:56
Speaker
We also rank number one in sales and trading in many of the local and international surveys.
00:09:00
Speaker
And that gives you the extent and the magnitude of our presence on the ground.
00:09:05
Speaker
But guess what?
00:09:06
Speaker
We are also innovator.
00:09:07
Speaker
We just executed the first ESG link repo trade with the MENA counterpart and the first bank to complete a security lending transaction in Saudi Arabia.
00:09:17
Speaker
Thank you, Patrick.
00:09:19
Speaker
Very exciting.
00:09:20
Speaker
Shifting gears slightly, many international clients have opened or are planning to open an office in the region.
00:09:27
Speaker
And they often utilize the region's free trade zones, such as the DIFC or ABGM, as a point of entry.
00:09:33
Speaker
Can you please tell our listeners what are the key advantages of setting up a presence in the region and how HSBC can support our clients in their establishment?
00:09:42
Speaker
No,
Why International Clients Choose MENA
00:09:42
Speaker
definitely.
00:09:43
Speaker
This is a very good point.
00:09:44
Speaker
And we're definitely witnessing a strong interest from our client, both in MENA, but actually outside MENA, in relocating to the region and more specifically the UAE.
00:09:53
Speaker
And this has come actually in two stages.
00:09:55
Speaker
While in the past, asset managers have decided to locate in the UAE because of lifestyle, what we're seeing right now is people coming to the EU because actually it has the right regulatory framework that protects their investor, that protects them.
00:10:10
Speaker
That is why they're coming to the UAE.
00:10:12
Speaker
While in the past we've seen asset manager based in UAE managing money with UAE or MENA underlying, the latest phase is we've seen actually global macro player, global asset manager player moving out of Asia, moving out of Europe, moving out of the U.S.,
00:10:28
Speaker
relocating in the UAE to run global portfolios.
00:10:32
Speaker
And that is a transition we've seen over the past few years.
00:10:35
Speaker
And that is amazing.
00:10:36
Speaker
And again, this didn't happen by accident.
00:10:38
Speaker
As we said it before, it happened because those are years of investment in structural reform, in the structural infrastructure.
00:10:45
Speaker
And now we're seeing finally the result of that.
00:10:49
Speaker
Many international clients like ourselves have established in both the DIFC and in the ADGM.
00:10:55
Speaker
The country's development plans are what I'm focused on.
00:10:59
Speaker
Take a look at the We the UAE 2031 vision plan.
00:11:03
Speaker
It aims to double the size of the economy by 2031.
00:11:07
Speaker
to generate more than $200 billion in non-oil exports and raise the total value of a trade above $1 trillion.
00:11:16
Speaker
The planned growth in population will boost consumption and support appetite for real estate.
00:11:22
Speaker
That will create more demand for credit, for savings and investment products.
00:11:27
Speaker
And that implies more growth and development for capital and asset markets.
00:11:32
Speaker
Our own MENA Markets Conference is a great guide to the future.
00:11:37
Speaker
We had record attendance this year.
00:11:40
Speaker
Our next event is in February, 2024.
00:11:44
Speaker
We look forward to seeing many more people there.
00:11:49
Speaker
Thank you both for your insights.
00:11:51
Speaker
Incredibly interesting.
00:11:52
Speaker
It's been an exciting few years for the region.
00:11:55
Speaker
The growth we're seeing today is certainly the building path for the future success.
00:11:59
Speaker
And HSBC is well positioned to support our clients in this journey.
00:12:02
Speaker
Gabriela, back to you.
00:12:05
Speaker
Thanks so much, Patrick, Mohamed, and Matt.
00:12:08
Speaker
And it's really been fascinating for me as well.
00:12:11
Speaker
I would like to thank you for listening to this edition in our series of Minet Talks podcasts.
00:12:16
Speaker
We hope that you enjoyed learning more about the growth of asset management landscape in the Minet region.
00:12:22
Speaker
Stay tuned for more from our podcasts as we explore more trends in the coming weeks.
00:12:27
Speaker
Thank you for joining us at HSBC Global Viewpoint.
00:12:31
Speaker
We hope you enjoyed the discussion.
00:12:33
Speaker
Make sure you're subscribed to stay up to date with new episodes.