Transcript
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.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Welcome to the latest in our MENA Talks podcast series.
Speaker: We are featuring a variety of different topics that are currently trending in the MENA region.
Speaker: We now explore the growth of asset management landscape in MENA.
Speaker: Introducing the topic is HSBC's Global Co-Head of Platform Solutions and Head of ESG Sales Americas, Matt Corrali.
Speaker: Matt, over to you.
Speaker: Thank you, Gabriella.
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.
Speaker: Patrick, Mohamed, hello.
Speaker: Pleasure speaking with you today.
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.
Speaker: Can you please characterize this growth and describe the policies which have been implemented to attract it?
Speaker: Look, it is a result of, I would say, many things.
Speaker: Macroeconomic and geopolitical factors have definitely driven this growth.
Speaker: After the pandemic, the region and more specifically the UAE opened very early.
Speaker: They witnessed a surge in economic momentum.
Speaker: On the top of that, you have to add the massive gain in energy prices.
Speaker: On the top of that, the geopolitical, I mean, the UAE and the Gulf have a very good advantage location.
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.
Speaker: And it's not just China.
Speaker: It's China, India, all the ASEAN country.
Speaker: On the top of that, there is also the structural reform.
Speaker: You look at the UAE, they massively invested in infrastructure over so many years.
Speaker: You look at Saudi Arabia with Vision 2030.
Speaker: All those are behind that growth, but I leave it to Mohammed to expand more on this topic.
Speaker: I agree with everything Patrick has just said.
Speaker: UAE is my home and what we have achieved is incredible.
Speaker: The country is only 52 years old and the scale of change in my lifetime has been massive.
Speaker: A few examples to share.
Speaker: We've gone from having no stock market to being one of the world's top five listing venues.
Speaker: We've gone from one highway to a country where the skyline is recognized globally.
Speaker: The UAE is a global hub because it has had a clear vision and a strong leadership.
Speaker: Think about the investments made in infrastructure for travel, tourism and trade.
Speaker: And now we see the same investment in technology.
Speaker: The most recent changes to visa rules, to the weekend days and the creation of free trade zones
Speaker: have all helped to reinforce the reputation of the UAE as a global hub for business and investment.
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.
Speaker: Patrick Muhammad, thank you for that.
Speaker: It's absolutely fascinating and very exciting to see the pace of growth.
Speaker: As a result of all these positive structural changes, how do you think this is impacting the investment landscape in the Middle East?
Speaker: It is making the story here even more compelling.
Speaker: And we all know that investors are always looking for a good story.
Speaker: There have been 13 new IPOs since the start of last year and close to $17 billion of capital has been raised.
Speaker: This has opened the door to investors who had never thought about the Middle East before.
Speaker: We have worked on 85% of the IPOs by deal value in the UAE.
Speaker: No other bank can give clients access to new listings like we can.
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.
Speaker: I guess the question is why?
Speaker: because what we are seeing is the result of careful planning, strong leadership, and clear vision.
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.
Speaker: So what you have in the UAE is a stable, reliable, low tax location.
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.
Speaker: Look, the MENA region is definitely becoming more interesting as an investment region.
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.
Speaker: Now the things have turned.
Speaker: Now what we're seeing is Western investors going to the region because there is growth potential in the region.
Speaker: They want to invest in the region.
Speaker: They want to invest in the Gulf.
Speaker: And if you look at foreign direct investment into Saudi and UAE, they did hit record high with $40 billion in 2022.
Speaker: And we expect this to continue in 2023.
Speaker: Saudi Arabia, the UAE, Kuwait and Qatar are now all listed emerging market indices.
Speaker: They are all included in the MSCI emerging market indices.
Speaker: Bahrain and Oman are implementing market reform that will also allow them to become included in the future.
Speaker: And again, that didn't happen by accident.
Speaker: This is on the back of major structural reform in the financial services.
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,
Speaker: All those are contributing to the growth of the financial market in the region.
Speaker: Patrick Mohamed, thank you for that.
Speaker: You touched on it briefly.
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?
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.
Speaker: Our story goes hand in hand with the UAE.
Speaker: We were the only bank operating here when we opened our doors for business in 1946.
Speaker: We saw the opportunity to invest and we've been investing ever since.
Speaker: Go back 70 years, we helped finance the dredging of Dubai Creek.
Speaker: That was a key step in UAE becoming a global container shipping hub.
Speaker: Last year, we were the number one global coordinator for the IPO market in the UAE.
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.
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.
Speaker: And no bank does that better than HSBC because our international network covers more than 90% of global GDP, trade and financial flows.
Speaker: It puts us at the heart of the most exciting growth and investment prospects in the world.
Speaker: I concur with Mohamed.
Speaker: We've been there in the region for decades, but guess what?
Speaker: We will keep adding resources because it's important and because we believe in the growth of the region.
Speaker: Yes, in ECM, we were ranked number one last year, and we are on the ticket of many IPOs.
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.
Speaker: We also rank number one in sales and trading in many of the local and international surveys.
Speaker: And that gives you the extent and the magnitude of our presence on the ground.
Speaker: But guess what?
Speaker: We are also innovator.
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.
Speaker: Thank you, Patrick.
Speaker: Very exciting.
Speaker: Shifting gears slightly, many international clients have opened or are planning to open an office in the region.
Speaker: And they often utilize the region's free trade zones, such as the DIFC or ABGM, as a point of entry.
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?
Speaker: No, definitely.
Speaker: This is a very good point.
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.
Speaker: And this has come actually in two stages.
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.
Speaker: That is why they're coming to the UAE.
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.,
Speaker: relocating in the UAE to run global portfolios.
Speaker: And that is a transition we've seen over the past few years.
Speaker: And that is amazing.
Speaker: And again, this didn't happen by accident.
Speaker: As we said it before, it happened because those are years of investment in structural reform, in the structural infrastructure.
Speaker: And now we're seeing finally the result of that.
Speaker: Many international clients like ourselves have established in both the DIFC and in the ADGM.
Speaker: The country's development plans are what I'm focused on.
Speaker: Take a look at the We the UAE 2031 vision plan.
Speaker: It aims to double the size of the economy by 2031.
Speaker: to generate more than $200 billion in non-oil exports and raise the total value of a trade above $1 trillion.
Speaker: The planned growth in population will boost consumption and support appetite for real estate.
Speaker: That will create more demand for credit, for savings and investment products.
Speaker: And that implies more growth and development for capital and asset markets.
Speaker: Our own MENA Markets Conference is a great guide to the future.
Speaker: We had record attendance this year.
Speaker: Our next event is in February, 2024.
Speaker: We look forward to seeing many more people there.
Speaker: Thank you both for your insights.
Speaker: Incredibly interesting.
Speaker: It's been an exciting few years for the region.
Speaker: The growth we're seeing today is certainly the building path for the future success.
Speaker: And HSBC is well positioned to support our clients in this journey.
Speaker: Gabriela, back to you.
Speaker: Thanks so much, Patrick, Mohamed, and Matt.
Speaker: And it's really been fascinating for me as well.
Speaker: I would like to thank you for listening to this edition in our series of Minet Talks podcasts.
Speaker: We hope that you enjoyed learning more about the growth of asset management landscape in the Minet region.
Speaker: Stay tuned for more from our podcasts as we explore more trends in the coming weeks.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
