WM April

April 2016

VOLUME: 01 | ISSUE: 12

www.wealth-monitor.com 40 In Focus

Ishrat Kiyani,
Head of Mashreq Gold

42 Taking Stock

Momentum Investing

CMOASRMKOESTS WHAHTO’ST

Energy: Crude The New Case
Awakening For Risk Assets

BBUEALRLSSVS BLUE CHIP

Safe As Islamic Home
Houses? Finance

TTERCEHNNDOZLOGY

Quants

Portfolio: UAE Property Market Ready Reckoner

“It’s not a catastrophe for Dubai property market”
Says Ismail Al Hammadi, Managing Director, Al Ruwad Real Estate, Dubai

April 2016 | www.wealth-monitor.com

17th annual

3 CONFERENCES 2-3 May 2016 1 EVENT
Ritz-Carlton, Dubai, UAE

2 DAYS

WHY ATTEND

Meet institutional investors, 3 TRILLION ASSET 2:1 INVESTOR TO 400 TOTAL 50 SPEAKERS
SWFs, pension funds and ALLOCATORS MANAGER RATIO ATTENDEES
family offices from across >50% SWFS, PFS,
the Middle East 50 CONFERENCE EXCLUSIVE AFTER- 150 FACILITATED FOS ATTENDEES
SESSIONS HOURS PARTY MEETINGS
SPEAKERS INCLUDE

Dr Rania Azmi Anand Subramaniam Sharmila C Kassam Zulfe Ali Ciarán Barr Dr John Rutledge
Investment Director Chief Investment
Strategic Advisor CFO Deputy CIO CIO Railpen Strategist
Middle East Bahrain Mumtalakat SAFANAD
Sovereign Wealth Bahrain National Employees Holding Co. (Pension funds) (Principal investment
Fund
Holding Retirement System (Sovereign wealth fund) house)
(Sovereign wealth fund)
(Sovereign wealth fund) of Texas

(Pension fund)

SPONSORS

TO FIND OUT HOW TO
IMPROVE YOUR PORTFOLIO'S

RETURN, VISIT

www.terrapinn.com/MEIS/info

www.wealth-monitor.com | April 2016

April 2016
VOLUME: 01 | ISSUE: 12

www.wealth-monitor.com EDITOR’S FLOOR
Publisher
Semantics Global Media FZ LLC Wealth Monitor Turns 1...
And We Just Want To Say Thank You!
Dubai Media City
PO Box 500683 For the past one year, we at Wealth Monitor have worked hard to bring
Dubai, U.A.E out a magazine that is insightful, surprising and original in content.
T: +971 4 2766080 F: +971 4 2766081 This month we celebrate our first anniversary and it’s been such a fun
[email protected] | www.semantics.ae (and stressful at times) ride to get here.

Editor in Chief As we celebrate, we believe it’s just a beginning. Over the past
Arshad Khan | [email protected] 12 months, we’ve been making efforts to create editorial products to
Editor appeal to all sorts of readers — from the avid financial markets watcher
Sunil Kumar Singh | [email protected] to the occasional re-tweeter. But most importantly, we’ve packaged
Research & Analysis content in such a way that it deepens the engagement among readers.
Fareem Chagla | [email protected] And not to speak of the partnerships that we’ve leveraged over a short
Contributors period of one year. For our valued partners — from ADX, DGCX, IIF,
Ashley Freeman Skyline University College and Phillip Futures DMCC, to leading research
Dr. Garbis Iradian firms such as Marmore MENA Intelligence, Marketstoday.net, IFA Global
Bruce Powers, MarketsToday.net and Tradepedia — we have a lot to be thankful for.
Tradepedia
IFA Global DMCC, Dubai We are also thankful for our readers today and every day!
Marmore MENA Intelligence, A subsidiary of ‘Markaz’ We encourage your active participation and invite you to share your
Marketing & Advertising views at [email protected] on how we can improve the magazine
George Wahba | [email protected] further. We’ve been successful in publishing some of the memorable
M: +971 50 9800 630 articles and Exclusive news reports across our digital and print platforms.
Chandana Ainwale | [email protected] Over the last year, we have been fortunate to publish hundreds of
M: +971 56 5499 619 articles and news reports, including news, countless online articles and
Printed By research reports from our Wealth Monitor Intelligence desk. We have
Masar Printing & Publishing, Dubai lost count on how many online specials and social media posts we’ve
T: +971 4 4484000 | www.masarprint.com published so far, all of which got tremendous response and likes.
Distributed By
GLS International Media Placement, Dubai As you read this Special issue, we look back and we look ahead.
T: +971 4 5519685 | www.gls.ae.org As we look back on this past year, we realize how much we have done.
Mobile, Tablet & Desktop Apps By But we’ve miles to go together. Over the coming months and years,
Yudu Ltd. London, United Kingdom we will continue to set new benchmarks for the financial media in the
Disclaimer Gulf region and beyond. We also do hope you will continue your
support to us.
All content published in Wealth Monitor is for information purpose
only. Nothing in this magazine shall be construed as investment advice, Happy reading Wealth Monitor!
nor does it represent the opinion of or recommendations by Semantics ARSHAD KHAN
Global Media on any particular stock, commodity, mutual fund,
lev radin / Shutterstock.com portfolio, or investment strategy. Wealth Monitor or Semantics does not Editor in Chief | [email protected]
have any liability for any investment loss arising due to the decisions www.semantics.ae | www.wealth-monitor.com
based upon the content published herein and under no circumstances
shall Semantics or its employees be held responsible for any loss or wealthmonitor wealth_monitor wealth-monitor wealthmonitor wealthmonitor
damage caused by investments based on information obtained from
Semantics publications. Readers/subscribers are advised to discuss To visit Wealth Monitor website, please scan the code
with an expert/broker/financial planner before buying or selling
any asset or making any investment decision. Semantics and Wealth
Monitor magazine do not claim to be complete or free of errors and the
liability to verify pricing, data, views and other information published in
Semantics and its publications rests with the reader/subscriber. While
the information/data/statistics in this issue are taken from sources
believed to be reliable, Semantics Global Media does not guarantee its
accuracy and correctness and any error or omission shall not be made
the basis for any claim or demand or cause of action. All rights reserved.
No part of the publication should be reproduced, distributed, or copied
without the written permission from the publisher.

April 2016 | www.wealth-monitor.com

P.08 Face Value
Ishrat Kiyani,
Head of Mashreq Gold

CONTENTS P.44 Blue Chip P.10 Bulls vs Bears

Scaling Up Safe As H ouses?

P.47 What’s Not

The US dollar tumbled after the Fed’s
dovish stance, and is likely to remain

under pressure in the near future

P.54 Dashboard

The Next Step
Forward

P.56 The Last Laugh

Homing In

P.28 The Cycle Hasn’t Turned Yet

Some base metals have seen short-term
triusrinnigntgreanrodu. nwBdwu?wt.iwsetahlthe-mmoneittoarl.csoemc|tAoprrirle20a1l6ly

P.04 Opening Bell CONTENTS P.38

Major News Stories From In Focus
Around the Region Safe Haven in Turbulent Times?

P.23 Markets Cosmos P.48 Technology
Trendz
News and Data on Precious Number Game
Metals, Base Metals, Energy,
Agri/ Soft, Currencies and P.32 Closing The Gap

Arabian Bourses Agri-commodities prices
continue to remain under
P.45 Markets Rewind pressure

History of Property Bubbles

P.46 What’s Hot

Will the bullish momentum con-
tinue?

P.42 Taking Stock

Befriending the Trend

P.24 The Bull’s Back

Precious metals are on the rise after the US
Federal Reserve struck a dovish tone

P.28 Crude Awakening

While crude oil is expected to trade
with a positive bias, fresh longs
Ashproil 2u0l1d6 |bwewwa.vwoeaildthe-mdoanittoer.cloemvated levels

OPENING BELL

News

In Numbers

“We are looking forward to 61% 9%
support economic diversification
policies which complement the UAE High Net Worth Overall YoY growth in
‘UAE Beyond Oil Strategy.’ We Individuals Set to Invest in card spends across the
will focus on creating integrated Global Real Estate in 2016, UAE, as per a report by
solutions and innovative Network International.
initiatives that contribute to the according to Cluttons’
achievement of these ambitious 2016 Middle East Private $500m
objectives and national
priorities.” Capital Survey. Dubai
- H.H. Sheikh Ahmed bin Saeed joins London & New York
Al Maktoum, Chairman of as preferred investment
DAFZA
destinations.

QAR 66m Sukuk listed by Arab
Petroleum Investments
The net income Corporation (APICORP)
recorded by Shariah
compliant, Qatar First on Nasdaq Dubai on
Bank (QFB) for full the 8th March 2016.

year 2015.

46%

HNWI’s surveyed under the 2016

GCC Wealth Insight Report, by

4 Emirates Investment Bank believe
movement in oil prices to be key

theme impacting investment

decisions.

www.wealth-monitor.com | April 2016

OPENING BELL

“Today the question on 86%
everyone’s mind is: will the
low oil price environment The percentage of
stall the growth of Saudis going online
renewables? We don’t at least once daily
believe so.” via smartphone or a
computer, a whopping
- Alex Thursby, NBAD’s 42% increase since
Group CEO 2012 as per Google’s
latest Saudi Arabia
AED $864.2m Connected Consumer
27.3b
The size of public cloud Survey.
Overall group revenue services market in the
for Majid Al Futtaim, the Middle East and North 4%
leading shopping mall, retail Africa (MENA) region
and leisure pioneer across projected to grow 18.1% Annualized Returns
the MENA, up 8%YoY for full in 2016, according to to Bondholders in
2015 distributed by
year 2015. Gartner, Inc. National Bonds.

AED 23m

Cash pay-out, translating
to a dividend of 20%
declared for the year

2015 by Dubai National
Insurance & Reinsurance

PSC (DNIR).

0.23% $3.7b AED 176 bn 5

Average contribution of Added to the UAE’s GDP Size of Dubai’s non-oil
card usage to UAE GDP from 2011 to 2015 by trade with China over
increased electronic 2015, maintaining its
between 2011-2015.
payment (card) usage as position as Dubai’s
April 2016 | www.wealth-monitor.com per study commissioned by leading trading partner.

Visa Inc.

OPENING BELL

News That Made Headlines

GCC debt issuances What’s pushing UAE residents
could crowd out into debt trap?
private borrowers
privileges that many have
been enjoying for years
makes this lifestyle change
GCC governments are expected to raise easier said than done, say
between $285-390 billion cumulatively
through 2020 through local and experts.
“In extreme situations,
international bonds and the new debt debt repayment should not
issuances by the GCC government could
usher in a new era for GCC fixed income exceed 30 per cent of your
income – the remaining 70%
markets, according to a presentation should be kept for savings
by Kuwait Financial Centre “Markaz” on
“Forecasting Sovereign Debt Issuances in and other expenditures,” said
SS Raju, personal finance
GCC” in collaboration with Kuwait Banking expert at Nexus Group.
Association. The challenging environment “And 30% is the absolute maximum.
posed by lower oil prices should be UAE residents adopting a lavish Prudence would suggest it should
converted into an opportunity to develop lifestyle and taking out excessive loans be no more than 10%. However,
the domestic debt markets. In this regard, they cannot afford are increasingly today, we find that many residents
establishment of debt management putting themselves at risk of long- spend a great portion of their salaries
office and regulatory framework to clearly term debt, according to the region’s paying back existing debt.” To protect
communicate to the markets is necessary. financial broker, Nexus Group. As oil consumers, the UAE Central Bank has
Though domestic debt issuance allows prices drop to the lowest rates the specified that the Debt Burden Ratio
for easier and faster way to raise capital world has witnessed in decades, and (DBR) – the maximum percentage
at lower credit spreads, it could usurp regional businesses face cutbacks, of an individual’s income that goes
liquidity and ‘crowd out’ borrowing space responsible spending has become towards debt payment – should be no
for private borrowers, the presentation the mantra of 2016 with many of the more than 50%.
delivered by M.R. Raghu, Head of Research country’s residents striving to save
at Markaz and Managing Director of more and spend less. However, the

Marmore MENA Intelligence, a research 3-in-4 Gulf’s super-rich prefer to keep their
subsidiary of Markaz, said. assets close to home
On an overall basis for 2016, Raghu The majority (76%) of GCC HNWI what has been a challenging year for
stated that the financing need for GCC investors prefer to invest in the region the region, with the falling oil price
countries to be at $151.3 billion of which over global markets, despite any and geopolitical instability, the GCC
$78.1 billion is expected to come from geopolitical concerns, says the 2016 remains an attractive investment
reserves (52%), $57.7bn from domestic “GCC Wealth Insight Report”, published destination for HNWIs. However, there
and international bond issuances (38%) by Dubai-based Emirates Investment is a clear element of caution lingering
and the rest through loans (10%). Raghu Bank, an independent private and amongst investors. “In this year’s
said that the low oil prices has altered the investment banking boutique. The report, we see a clear shift towards
fiscal landscape of GCC countries as the GCC Wealth Insight Report 2016 is conservative investments, with GCC
prized fiscal surplus registered in erstwhile based on a survey of HNWIs from the HNWIs appearing to be more risk
years has flipped into large scale deficits to United Arab Emirates, Qatar, Kuwait, averse and adopting a defensive
the tune of $160 billion in 2015 and 2016 Saudi Arabia, Oman and Bahrain. approach to their wealth allocations.
respectively. In 2015, the deficit was partly Face-to-face interviews were held in This is evidenced in the notable
met by domestic bond issuances and the each country between September and shift this year towards cash and
remaining by liquidating reserves held November 2015 among the national deposits as well as gold and precious
in Sovereign Wealth Funds (SWFs). Saudi
Arabia for the first time in 8 years issued
6 local debt to raise approx. $26 billion from

domestic banks and utilized almost $100 population as well as expatriates. metals,” Khaled Sifri, CEO of Emirates
This year’s findings show that in Investment Bank, said.
billion of its reserves.

www.wealth-monitor.com | April 2016

OPENING BELL

The Best From www.wealth-monitor.com Most Read on

To read more of our web specials, log onto our website. www.wealth-monitor.com

‘World in the Grip of an Unwarranted 1 Investor appetite for risk assets back
Economic Anxiety’ in vogue. Is the worst over?

The last one month has seen a sudden environment where western monetary 2 Cash levels Down, Commodities
change in the gloom and doom which and fiscal policies are largely exhausted positions Up: BofA ML Fund
engulfed the globe in the beginning and structural reform is difficult to enact, Manager Survey
of the year. Stock markets, generally low oil prices are the one pro-growth
treated as a sentiment indicator, world factor that has generally supported 3 Gulf Countries’ Dollar Pegs To Remain
over have seen a recovery of sorts — the positive job creation, higher real For The Next ‘Few Years’
oil has breached the $40 a barrel level income, and low inflation environment
(Read: Crude Oil Jumps 57%: The Rally which the world’s major economies are 4 A Step-By-Step Guide to Buying
That Few Saw Coming) and there are experiencing. Property in Dubai
fewer murmurs around China and
the bubble it was growing into. Local Banking system going kaput. The 5 Global capex to shrink by a further 4%
sentiment too has been buoyed by exposure the banking system globally has this year, says S&P’s
the change of heart, few have answers towards the energy is largely exaggerated
to, and suspicion grows around the and fears around the same leading to a 6 Commodity Rally Gathers Pace:
sustenance of the swing. systemic crisis are highly pronounced. Where Will It Go From Here?

We interacted with Dr. Marie Owens On the impact of lower oil prices to 7 Crude Oil Jumps 57%: The Rally That
Thomsen, Chief Economist, Indosuez the GCC, she highlights “Low oil prices Few Saw Coming
Wealth Management, the global will support the global economy over the
wealth management brand of Crédit short to medium term, while continuing 8 Revealed: The Highest Dividend Yield
Agricole group, for some of her thoughts to inflict pain on the oil-exporting Stocks in UAE and Saudi Arabia
around the same, besides her views countries. Only structural reform is
around comparatively low oil prices being capable of easing that pain and, as such, 9 3-in-4 Gulf’s super-rich prefer to
an impetus towards change and reforms the low oil price scenario is presenting a keep their assets close to home
in the GCC. huge opportunity for the GCC countries.
Reforms do work, and should not be 10 Crude oil prices will rebound further,
Dr. Thomsen underlines what she refers limited to restoring fiscal balances but says StanChart
to as the ‘Economic Anxiety’ that has rather broadened to promoting an
gripped the world, which makes a case efficient allocation of resources in the wealthmonitor wealthmonitor wealth-monitor
for disbelief around any greenshoots or economy, boost job creation, and nurture
positivity. To give an idea, 2008 had nearly non-oil sectors. This will be necessary to wealth_monitor wealthmonitor
90 countries in what may be referred to as restore the region’s GDP growth to the
recession – the comparable figure today levels it is accustomed to.” Wealth Monitor March Poll 7
is 22. The world GDP stands at nearly 3% Will the rising borrowing by GCC
against the 30-year average of 3.5%. She governments crowd out private
gives a perspective around this anxiety investment and make bank financing
being an offshoot of a high degree of tougher for private borrowers ?
misconception prevailing around: Yes

Majority linking deflation with 54%
depression. Differing with this, she No
highlights the world is not facing
deflationary recession but as deflationary 25%
expansion. Can’t say

Importance of energy to the 21%
world economy. Oil-dependent
nations contribution to world GDP is To vote, log onto www.wealth-monitor.com
approximately 17%, roughly the same
as China. Besides, it must be stressed
that a global recession has never
been provoked by low oil prices. In an

April 2016 | www.wealth-monitor.com

FACE VALUE | Ishrat Kiyani

‘Suitcase Banker

is a Thing of the Past’

Ishrat Kiyani, Head of Mashreq Gold, tells
Wealth Monitor regional wealth managers are
focusing more on local markets, than offshore
destinations, for investment opportunities

Given the current market as well as government level
conditions, what will 2016 (in the form of sovereign
look like for the UAE and wealth funds or SWFs).
the Arabian Gulf wealth Interestingly, we are seeing
management sector? a new development in the
The wealth management regional wealth management
industry is entering an exciting sector. Until a few years ago, a
stage in the UAE and the Gulf major chunk of clients’ money
region. This, to a large degree, tended to be invested abroad
is driven by the global events, in global markets for higher
such as the slowing down of yield. Of late, there’s been a
China’s economy, pressure on shift in this trend because of the
the US Fed to increase interest fact that the competition for
rates, and of course the low wealth management business is
crude oil prices. intensifying in the region with
In the GCC region, the shift many local as well as global
in the wealth management banks vying for a share of the
business is also driven by the pie and to expand their local
fact that over the past decade presence.
this region has earned its status That’s why we see the life of
as a global financial hub. The the ‘suitcase banker’ being a
growth opportunities for wealth thing of the past now. Earlier,
management in the GCC are wealth managers and private
8 immense. Over the last 10 years, bankers used to travel out of the

the huge boom in crude oil Gulf region for business purpose
prices has generated wealth as the target of investment was
creation both at an individual outside the region. There was

www.wealth-monitor.com | April 2016

FACE VALUE | Ishrat Kiyani

less focus on recruiting wealth advisors, alone. As a consequence of this, we’ve their investments through dollar-cost
and training and reskilling them as been able to reduce the ratio of clients averaging.
investment opportunities lay in offshore to RMs, thus giving them more time to
destinations where there was no need broaden and deepen the relationship with It’s said, the client is always right. What
for local relationship managers (RMs) and their clients. has your experience been like so far?
advisors. All that the wealth manager had How would you describe Mashreq Client is always right in the sense that it’s
was a product suite, which he would sell to Gold’s growth so far in terms of AUM, their money and we owe it to them to
his clients. That trend is becoming extinct client segments? What sectors have you make sure that we do the right thing for
as wealth managers are now refocusing favored historically? them and build a strong relationship with
internally on local markets. The AUMs have grown in line with our them. If you manage to establish a strong
expectations and whilst I cannot share relationship with them, the clients are
Going forward, I believe, the wealth the exact numbers, we have grown by not going to come back and tell you, “You
management business in the GCC is mid-single digit during the last 12 months. sold me something that I wasn’t aware of!”
well-placed despite what’s going on in Regarding asset choice, we believe That’s the reason why we encourage our
the global and regional markets. But 2016 there’s no one-size-fits-all concept since RMs to make sure no sale is executed in a
will be a tough year for all businesses asset class selection depends on each hurry, but only after fully understanding
including the wealth management individual’s needs and goals. the client’s needs and financial objectives.
industry. We treat our clients’ money as our own
money. It is also impressed upon our
One of the issues in this part of the world is RMs to ensure that they always put their
clients first, because if you look after your
that there’re no robust, independent regulation clients, they will in turn look after you.
One piece of bad advice or mis-selling
related to mis-selling of financial products, issue can damage your brand, reputation
and relationship. One of the issues in
unlike many mature economies this part of the world is that there’re no
robust, independent regulation related
How are you addressing the current From a product perspective, how does to mis-selling of financial products, unlike
market needs? Mashreq Gold compete with large many mature economies where there are
Clients are now looking for simplicity, global wealth management and private well-established rules governing the sale
clarity, alignment of interest and someone banks? of financial products.
they can work with and trust. We believe Multinational wealth management firms
it’s important to do need-based selling have had significant presence in the Ishrat Kiyani
rather than product push which happens region, especially in recent times. Local A Profile
quite often in this region. We believe in banks, on the contrary, are expanding
establishing a long-term relationship with their presence. It’s not only their size Prior to his position at Mashreq, 9
clients, understand their needs and goals that is increasing but also the level of Kiyani was the Regional Head
and match those goals and needs with sophistication. Therefore, the competition of Wealth Sales at HSBC Bank
the products that we have on offer, rather is more among the local banks and not so Middle East for the MENA region,
than the other way round where RMs keep much with multi-nationals. Mashreq has where he was responsible
pushing products irrespective of whether 4 decades of experience and existence for the implementation of
it meets clients’ needs or not. That leads to in the UAE and overseas and we are well the wealth infrastructure,
mis-selling. Based on whether our clients placed to service our clients efficiently managed costs and executed
are cautious, balanced or adventurous, with well-rounded financial solutions. discretionary incentive
we create a portfolio around that to make schemes, and supervised wealth
sure it fits into their needs. Subsequently, What’s your investment discipline? Do transformation strategy across
we review the portfolios on a regular basis you believe active value investing pays the network. Kiyani has also
to ensure they are on track to meet the off in current market conditions? undertaken a number of senior
clients’ financial objectives. Our investing discipline depends on managerial positions at HSBC
clients’ needs, their risk profile, their time bank of Middle East including
One of the issues in this part of the horizon and objectives. Based on that we his role as Head of Premium
world is that the customer experience is make recommendations and so we believe Banking, Wealth Management
not that great. That’s where the role of there’s no one overarching investment and Mortgages (UAE), and
RMs assumes prime importance in order recommendation. Also when times are Regional Head of Insurance and
to build the relationship with our clients. volatile, as they are at the moment, Wealth Management MENA.
During the last 8 months, since I joined we encourage our clients to drip-feed
the bank, we’ve doubled the size of our
salesforce. We had around 30 RMs when I
arrived and now we’ve over 60 in the UAE

April 2016 | www.wealth-monitor.com

BULLS VS BEARS | UAE Property Outlook

Is it time to worry about another housing slowdown in UAE? Will the
property market hit the brakes in 2016, or is it on the cusp of recovering?
Four of the region’s best property minds discuss the changing real estate
landscape to figure out what lies ahead for the UAE’s realty market

There is a tendency to associate the rates increased, on average, by 5%, with downward spiral and the moderation is
rise in real estate values with bubble, prime projects achieving up to 10% faster than the rents? Are off-plan sales are
while the moderation in prices with growth, and 3-4% growth for apartment making a comeback again in Dubai? What
the property endgame. But is that always sales prices. are the risks involved from an investor’s
the case? Not necessarily. Residential perspective? Are they seeing investor
sales in Dubai did record across-the- Wealth Monitor asked demand for luxury property in Dubai
board declines last year, with villa sales market experts if 2016 is waning and that of mid-level affordable
prices down year-on-year by 11% and time to buy or sell. The accommodation on the rise? What’s the
apartments by 8%, as per estimates by experts debate on the best option from the point of view of a
real estate consultancy Asteco. In case current state and the customer: buy or rent property in Dubai?
of Northern Emirates also, with the outlook of the UAE How real estate brokers are combatting
exception of Fujairah and Ajman, rental property market and falling sales and the downturn in the
rates declined marginally last year, with try to get insights into Dubai property market?
Sharjah and Ras Al Khaimah recording the factors behind
why property prices And here’s what they had to say….
2% falls each. Abu Dhabi however saw in many areas in
a slow but overall positive market Dubai are in
performance in 2015, as
apartment rental

10

www.wealth-monitor.com | April 2016

BULLS VS BEARS | UAE Property Outlook

David Dudley, International Director
and Head of Abu Dhabi Office at JLL MENA

It’s A Correction Not A Major Crash started when oil prices were strong.
The current slowdown in the UAE real Developments such as the airport
estate market should be seen as a minor expansion or the growth of Etihad Airline
correction as opposed to a major crash. have an economic multiplier effect,
While the impact of reduced oil prices ensuring continued GDP growth, albeit at
on the economy will lead to a short-term a reduced pace.
slowdown in demand, this is occurring Abu Dhabi Property Law To Bring
at a time of minimal supply completions Opportunities
leading to relatively stable market The new laws place greater responsibility
conditions. The market experienced a and regulation on developers, which will
major upswing from 2013 to 2014, led inevitably suppress supply growth. This
by the residential sales market, with will help reduce the risk of over-supply
prime residential prices growing at in the current period of weaker demand;
25% per annum. This pace of growth however the key will be to allow sufficient
was unsustainable. The current phase supply to come through to maintain a
is a slowdown and a relatively minor healthy balance between supply and
correction, rather than a major crash – demand to keep rents and prices at a
with reduced supply coming through competitive level. The good news is that
at a time of weak demand, allowing demand growth continues from major
underlying dynamics to catch up with the capital projects that started when oil
pace of value growth. revenues were strong. Projects such as
Selective Funding the airport expansion, the growth of
While liquidity has tightened, funding Etihad Airline and other major tourism
is still available for project finance and attractions, including The Louvre Abu
corporate level lending – it is just more Dhabi have an economic multiplier effect,
selective. The good news is that demand ensuring continued GDP growth.
growth continues from projects that

Matthew Green, Head of Research
& Consultancy, CBRE, UAE

Market’s Become Flexible specifically for expatriates working in 1111
The slowdown in activity within the the oil and gas sector and in some parts
residential sales environment has of the public sector. However, whether
certainly encouraged more flexibility in it is in Dubai or any other international
the market, although this has broadly market, real estate should always be
come from developers through waiving viewed as a long term investment, and
of registration fees and offering of more should be considered within your means.
flexible payment plans to investors. Demand For Off-Plan Slows
A Long Term Investment As was the case during 2006-2008, there
As with any market, there are potential was significant interest in off-plan sales
risks when purchasing a home in Dubai, during the last boom cycle from 2013-
particularly when utilising bank finance 2014, particularly for units from high
in a country where visas are linked to profile developers such as Emaar, DPG,
your employment. Given the uncertain Deyaar and Damac. However, since the
economic environment in the region second half of 2014, demand has slowed
at this time, security of employment considerably as investor sentiment has
has been identified as a key concern, turned negative amidst the onset of

April 2016 | www.wealth-monitor.com

BULLS VS BEARS | UAE Property Outlook

global economic challenges and concerns
over local market dynamics. Oversupply
and the slowdown in a number of key
source markets, including some of the
BRIC economies, were important factors
in this shift. Whilst supply fears have yet
to be realised amidst the slowing pace of
many construction projects, Dubai has
become a more expensive investment
destination for some international
investors due to the unrelenting strength
of the US dollar, resulting in weaker inward
investment volumes over the last 2 years.
However, history has shown that Dubai
has a cyclical and often speculative real
estate market, attracting significant capital
from international investors over the years,
buoyed by its safe haven status within the
region. As a result, we would expect to see
off-plan properties find favour once again
as the Emirate starts to recover.

VHaaliudSetrrTautaima, Head of Research,

Property Prices Begin Stabilizing bracket, while on the other side of the
Property prices in Dubai were indeed
in a downward spiral, but only for a spectrum, properties priced more than

AED 10 million represented 1.47% of all
limited period, between July 2014 and residential transactions during Q1 2016,
July 2015, after which, prices generally which is double the 0.72% recorded the
began to stabilize. According to our
proprietary ValuStrat Price Index (VPI), quarter prior to it.

June 2014 saw an index peak of 112.9 Speculators Out Of Picture
points as compared to the starting With speculators mostly out of the
100 point index for January 2014, by picture, off plan investors as well as
July 2015, the index dropped to 98.4 future end-users have become more
points, bottoming out at 97.9 points in cautious with their decision making
January 2016, it then saw a slight uptick as purchasing off plan can involve a
to 98.0 points during the following number of risks or drawbacks, especially
month. Therefore there was no effective in the case of buying something that
overall change in values across the 26 is not yet tangible and cannot be
neighborhoods we measure during the seen. Firstly, if the property market
second half of last year, with a minute experiences a decline during the
indication of recovery in some districts construction phase, the return on
during the first quarter of 2016. As far as investment may not be as good as
Dubai’s asking rents are concerned, they initially hoped for. Or in extreme cases,
continue to soften. a project can be delayed due to the

Demand on developer being short of funds, the
Generally speaking, there’s continued market position, or other reasons which
demand for the full spectrum of all translate to a loss of money and time

properties on offer, however, we do see for the investor – Many such cases exist
more focus on properties priced less from past crisis with buyers paying
12 than AED 1 million as almost half (46%- significant sums in deposit payments

49%) of the residential transactions on projects that become delayed and

in the last 14 months were in this stalled.

www.wealth-monitor.com | April 2016

BULLS VS BEARS | UAE Property Outlook

HRaanmjuptKoanpsoIonrt,eGrneanteioranlaMl anager,

Developers In Wait-And-Watch Mode demand for end-use homes, as people seek
The rental market in Dubai has overall to shift from a rental model to an owned-
reflected a marginal softening in rates. home lifestyle. Across the market, we see
There has been growth in rentals of new a shift in sentiment, with more customers
offerings and declines in projects with asking, ‘when should we buy?’ as against
inventory overhang. New units are entering ‘when should we sell?’ Several affordable
the market, however several freehold communities have been launched to meet
developers are carefully managing their the appetite for value housing but these are
pipeline with projections for delivery in yet to be handed over.
2017-18, and adopting a wait-and-watch Dubai’s Rental Market Attractive
attitude for this year. With less new supply This year will offer interesting insights
entering, the rental market trends are on how the rental market of Dubai will
dictated by demand from end-users who respond to the shifts in the neighbouring
seek specific conveniences including emirates. Sharper drops might have a fall-
connectivity, ease of access to lifestyle and out as small families may seek to shift their
leisure attractions, and a preference to be location of residence. But the traffic woes,
part of established communities. charges by way of road toll and the time
More Demand For End-Use Homes lost in commuting, which in turn impacts
Over the past year, the rental markets in the quality of life, will be deciding factors.
Dubai have held steady in most established For now, though, Dubai’s rental market
communities including Downtown Dubai, continues to be attractive in terms of yield.
The Greens and Dubai Marina, principally, This is based on firm fundamentals, and that
for this reason. Today, there is increasing is the mark of a mature property market.

Wrapping Up

Real estate market, like any other asset class, tends to move in a cycle. However, unlike many other assets, real estate markets are little 1133
more predictable as the recovery of real estate follows the macro-economic recovery. The outlook for the UAE housing market therefore
appears increasingly tied to the overall recovery in the economy, especially the crude oil prices. The UAE, and especially Dubai and Abu
Dhabi, has been an investment destination for buyers from around the world for many years, a trend which is expected to continue. The
elephant in the room, as experts would have us believe, is the attractive yields offered by Dubai property sector that continues to outpace
many developed markets around the world, both on the sales and leasing side.

April 2016 | www.wealth-monitor.com

PORTFOLIO | Interview

“It’s not a catastrophe for
Dubai property market”

Ismail Al Hammadi, Managing
Director, Al Ruwad Real Estate,
Dubai, tells Wealth Monitor Dubai
property market is not slowing
down. Rather it’s just a correction of
rates and a rebalancing between
demand and supply

Could you please take us through in a
bit detail about Al Ruwad Real Estate,
how did you start etc.?
Al Ruwad Real Estate provides complete
property related services ranging from
Project Planning, Real Estate Consultancy,
Property Management to Property buying
and selling, Leasing and Brokerage. Al
Ruwad is a one-stop shop for all types
of property investors, either corporates
or individuals. Initially, the idea behind
starting Al Ruwad was to venture into
property consultancy in Dubai as that was
14 the area where we found opportunities.

My background in real estate gave me
considerable edge and advantage to start

www.wealth-monitor.com | April 2016

this business. I have 20 years of experience on which point of price cycle one has PORTFOLIO | Interview
in Real Estate handling multiple projects entered the market.
in Dubai. Where do you see the market now and 7%
going into 2016?
Overall, the 20 years of my career I’m very optimistic that the prices will “Despite the
in Sales and Commercial Operations surely move up in the near future. correction,
in the Real Estate sector enriched me Nevertheless, the correction that we’ve Dubai
professionally and enabled me to develop seen over the last several months has property
deep understanding about Dubai been immaterial. A correction of 5-10%
property market. Al Ruwad is a brainchild in Dubai property prices is not a huge market is still
of that experience. After two years of number overall. It’s not a catastrophe giving the
operations of the Consultancy business, for Dubai property market. Rather it’s a
I decided to expand and include other normal phase. average yield
activities of Real Estate business, such as of 7%“
brokerage, etc. Last month, Dubai Land Department
How do you see the current Dubai statistics revealed that on a single day 15
property market conditions? registered property transactions in
Contrary to what many say, I believe Dubai jumped to Dh1.4 billion, one of
Dubai property market is not slowing the highest daily property transactions
down. Rather it’s just a correction of rates registered with DLD in recent times.
and a rebalancing between demand This shows investors’ trust is returning in
and supply. There’s a pretty fresh supply market.
coming into the market, which in many Do you see demand for affordable
cases is outstripping the demand. Dubai housing increasing in future?
is expanding and various real estate Yes of course. Dubai property market
projects are coming up in areas where cannot sustain and serve only high-end
nobody had expected so 5 years back. and rich investors always. We’ve seen
Areas like Remraam, JVC, etc. are seeing demand for affordable property segment
new interests from residents and nationals at much higher level than luxury segment,
moving in those areas. on both sales and leasing side. As much as
70% of demand is coming for affordable
Whatever therefore is happening in the and 30% for luxury properties. That’s why
market, we shouldn’t be scared of as this you’ll see many developers launching
is a normal and healthy development. If affordable housing projects as there’s
markets continue to go up without any where the growth lies.
correction, investors will face the same What’s the best option from the point
situation as they faced in 2006-07 when of view of an investor: buy or rent
there was too much hype built around property in Dubai?
property market. Today, thankfully, there’s Our strategy is to first identify the
no speculation, either in property sales needs of clients and then propose
or leasing. Despite the correction, Dubai the solution. As an advisor, we look at
property market is still giving the average client’s appetite, financial conditions
yield of 7% yield on both sales and leasing and their requirements, before advising.
side, which is higher than many other Understanding the client’s needs and
property hotspots around the world. meeting their expectations is the first
Going ahead, do you expect the ROI of priority.
Dubai property market to go up? Al Ruwad aims to be among the top 10
Dubai property market offers unique property consultancies in the region
value proposition as it offers quality by 2021. Do you have plans to go for
lifestyle, zero taxation and a world-class property development?
infrastructure, which remains unparalleled. It’s too early to say that. My dreams are
Many investors who bought in the boom definitely big, but I like to focus more
years before 2007 may find it a tough on achieving immediate targets than
market as property rates have come speculating on future plans. At present,
down from the peak. On the other hand, I see myself as an adviser to property
investors who entered the downturn developers for the coming three years.
phase of the cycle are reaping capital
gains now, since low property prices have
resulted in higher yields. So it all depends

April 2016 | www.wealth-monitor.com

PORTFOLIO | Property Ready Reckoner

TheRealty Bet

Is 2016 going to be a reprise of 2008 for the UAE real estate market,
or a turnaround is in the offing? Sunil Kumar Singh tries to explore

There’s been lots of talk going around slowdown much hyped? Following a believe the property market remains
UAE property market ‘slowdown’ flurry of noisy and negative gyrations resilient.
— from buyers/investors singing going nowhere, several recent trends
the blues, speculations about things reiterate that the fundamentals of the The market seems to be in for a quiet
going from bad to worse, to likening real estate market are being overlooked year and many suppose because there
current market conditions to those of or misinterpreted. Despite talk of gloom, was a rush into property a few years back,
2008, among others. Isn’t the it can be unsettling to see the market
however, there’re reasons to
going through

16

www.wealth-monitor.com | April 2016

PORTFOLIO | Property Ready Reckoner

bouts of volatility. But that’s because the A recent report How Average 2BR Apartment Rentals
market has now settled into a steadier, by Emirates
less-spectacular groove, and surely, the NBD ‘Dubai Real Have Moved Across UAE Since 2008
current situation cannot be likened to the Estate Update:
tough realty market of 2008-09, when the Feb 2016’ also 250
global financial crises hit the region.
The Two-Speed Market confirms that the 200
The gulf in property values and rentals pace of the price
had widened last year in the UAE, decline in Dubai’s 150AED 000’s pa
especially Dubai which, of late, is showing residential sector Source: Asteco
signs of narrowing. The latest trend is is stabilizing 100
the softening of the asking rents in many
micro markets of Dubai. in Feb 2016. 50
Residential
“As of Q4 last year, median asking rents property prices 0
were 2.3% less than the quarter prior to
it, 5% less than Q4 2014 and 10.4% less have remained Dec Dec Dec Dec Dec Dec Dec Dec
than the same period two years ago. relatively 2008 2009 2010 2011 2012 2013 2014 2015
This can be explained by analysing at unchanged in
the new supply coming online in some February 2016 Dubai Abu Dhabi Al Ain Ajman Fujairah
locations, providing more options for
tenants, and by the long vacancy periods Sharjah New Ras Al Khaimah New Umm Al Quwain
some landlords initially opted for to
secure higher income, then realizing that with apartment The luxury (premium) segment in the
a slightly lower asking rent would reduce villas sector was more resilient at -9.1%
the vacancy,” reasons Haider Tuaima, Head prices down -12.1% y/y and villa prices y/y while the standard segment of the
down -10.9% y/y, according to Phidar
of Research at ValuStrat. Advisory’s Dubai 9/5 House Price apartments sector also softened at -7.6%
y/y in February 2016. The strength of
Index, which is based on Dubai Land
Department (DLD) data but includes only the US Dollar is a constraint on demand,
nine apartment communities and five villa particularly for foreign investors, while low
communities in investor zones in Dubai, oil prices continue to weigh on sentiment.
the report said. Apartments account
for about 90% of residential real estate
transactions in Dubai. Not So Affordable After All
Since the introduction of the regulations
on mortgage lending by the UAE Central
Bank in October 2013, the issue of
affordable housing has been hogging
the limelight with many developers
coming up with projects labelled as being
“affordable”. But is that really so?
“Despite attempts by Dubai
Municipality to create designated
affordable housing quarters in the city,
this is yet to take off enmasse and remains
a vastly underserved segment of the
market. In order to help drive developer
interest, aside from prescriptive legislation
on quotas for affordable housing,
the authorities need to formalize the
definition of affordable housing; not only
in terms of those who could potentially
qualify, but also the type of housing stock
that needs to be created to help Dubai
remain competitive and attractive to
all income brackets,” notes a report by
Cluttons.
“The formalisation of an affordable
housing asset class,” it added, “would go
a long way to help create and nurture a
new property market segment, while at
the same time providing a new route to
ownership for aspiring households.” 1177

Fred Durie, CEO of Nshama, a Dubai-
based private developer, explains the

April 2016 | www.wealth-monitor.com

PORTFOLIO | Property Ready Reckoner

maths behind affordability, “The UAE has Dubai Apartment Sales Prices
over 820,000 middle-income households
representing about 40% of all households AED per ft2
in the country. By definition, affordable Source: Asteco
housing must not cost more than 30%
of the gross household incomes for 2,050
households earning between AED 10,000 1,210
to AED 30,000 per month.” 2,700
1,700
“From market trends, we have observed 1,250
that Dubai’s property sector is maturing, 850
and there is clear demand for end-use 2,700
homes,” he adds while underscoring the 2,200
need to build houses for mid-to-low 1,800
income bracket earning between AED 1,600
12000-25000 per month to drive Dubai 1,700
property growth to the next level. 1,365
1,050
Concurring with Durie is John Stevens, 688
Managing Director of real estate services 2,000
company Asteco, who says, “We are 1,370
currently witnessing buyer preference 1,400
focused on more affordable mid-market 1,150
products as evidenced by the take-up 1,100
iin recent launches targeting this market 938
segment, this is the combination of 2,800
an affordable price tag and attractive 1,720
payment plans offered by developers.”
Business DIFC Discovery Downtown Dubai Greens International JBR JLT Jumeirah Palm
Bay Gardens Dubai Marina City Village Jumeirah

2008 2015

Find Good Reasons To Buy Off-Plan properties traditionally attract a higher
Off-plan properties became popular percentage of investors and speculators
during the height of the property boom than end-users when there are ample
in Dubai in 2005-06. But the buyers of finished properties available for sale in the
these properties were also among the market.
worst hit when the market fell sharply in
2008-09. However, now as developers are “Across the UAE, the rental market
seeing off plan sales making a comeback, shows stability and therefore demand
this naturally raises the question around is still strong from investors for off-plan
the risks involved from an investor’s properties who are looking at procuring
perspective. Experts say, off-plan assets which yield a good return on
investment,” maintains Stevens of Asteco.

“Investor Optimism is Growing”

Sameh Muhtadi, CEO, Bloom Holding, says the one positive trend over the
last few months is that investor optimism is growing

The general sentiment in the region’s value proposition, i.e., we offer the right When do you think the market
real estate sector everyone is talking product in the right place and at the right sentiment will improve?
about is that of slowdown. What’s your price.
take? The global economy and markets have

The real estate sector is going through Many players in the UAE’s real estate become more volatile, complex and even

somewhat of a slowdown, and in some sector are struggling to maintain more unpredictable and we all have seen
parts of the UAE we’ve seen significant positive cash flows in the current
corrections in the prices. However, the market conditions and also as banks in that in case of the fluctuations in crude oil
slowdown is not everywhere. At the end of the UAE being more cautious now while prices. Just when everyone thought prices
the day, it all depends on what’s on offer lending to property sector. Are you are on the way to hit new lows, there was
to the buyer, the location, the pricing level, facing any kind of such issues? a sudden rebound and a shift upwards.
and what’s the overall look and feel of the The real estate market is no different from
project. In regards to Bloom Properties, Banks certainly have become more other asset classes in that, in many cases,
we’ve been doing extremely well. February cautious now, but that’s obviously real estate investment decisions are driven
2016 was one of our best months ever. in response to the property market by sentiment and optimism about the
Though we’re not immune to what is conditions. Banks are now looking at future. Nonetheless, the one positive trend
feasibilities of the project much more we’ve seen over the last few months is that

happening in the market, we’ve positioned closely, they rely more on independent investor optimism is growing. The other

18 ourselves well in the marketplace, evaluators reports, and they regularly significant factor impacting the real estate
primarily because our emphasis is on review the projects progress. However, in market sentiment is the stock market

being strategic more than tactical. All so far as Bloom Properties are concerned, trends. Thankfully, we’ve seen some
our projects are in prime locations. In a we haven’t had any issues in arranging recovery in both Abu Dhabi and Dubai

nutshell, the key to our success lies in our project financing. equity markets in the last period.

www.wealth-monitor.com | April 2016

PORTFOLIO | Property Ready Reckoner

He cutions that there is still interest from contributing to buyers’ security and Ahmad Al Matrooshi, Managing
bullish long-term speculators (as opposed subsequently enhancing growth. Director, Emaar Properties, sums it up
to quick flippers) to invest in off-plan like this, “Dubai’s property sector has
properties, as they believe that property There’s one more difference. Unlike Abu evolved significantly over the past few
prices will continue to rise over the next Dhabi, in Dubai the pipeline of supply is years and is today a maturing market with
few years, thereby delivering them capital massive as many projects having been strong demand from end-user investors.
growth on their investments. announced in the last couple of years. As The core economic sectors of Dubai
A Tale of Two Cities Sameh Muhtadi, CEO of Abu Dhabi-based including tourism, retail and hospitality
While residential sales in Dubai last year Bloom Holding, explains, “. An estimate are performing well. The ongoing
recorded across-the-board declines, with of up to 50,000 units is in the pipeline preparations for Expo 2020 Dubai and the
villa sales prices down year-on-year by for delivery in the next 3-4 years. On the infrastructure projects being developed
11% and apartments by 8%, in Abu Dhabi contrary, the Abu Dhabi property market continue to attract professionals from
saw apartment rental rates increase, doesn’t have a supply overhang. In fact, around the world, in turn benefiting the
on average, by 5%, with prime projects the market has a scarcity of supply, both real estate market. The various measures
achieving up to 10% growth, and 3-4% on the sales as well as leasing fronts.” undertaken by the government authorities
growth for apartment sales prices, as per have strengthened the property sector.
Asteco figures. Wrapping up, UAE’s, and especially Flipping, a practice that fueled concerns
Dubai’s property prices are expected to in the past, has been curbed. Apart from
Industry experts have also declared the rise as growth returns. There’s a broad- governmental regulations, Emaar has
new property law will benefit Abu Dhabi’s based real estate pullback, with prices also introduced several measures in
real estate growth. Abu Dhabi’s new correcting in many areas but things place to protect the long-term interests
Property Law No. (3) of 2015 took effect in are stabilizing now. The drivers for this of investors and to prevent unhealthy
January this year. Chris Taylor, CEO of Abu slowdown are a mix of supply-side factors speculation.”
Dhabi Finance, is confident that recent and demand-side factors, but there’re
legal and economic developments in the signs that the upside will finally unravel. In a nutshell, in a property market
capital will bring best practice into the The odds of a further price correction going through speed bumps get your
capital’s real estate, with numerous factors is remote, unless black Swan events ducks in a row before you make decision
take place that are almost impossible to to buy or rent.
predict.

“Dubai Property Cycle Turns Faster”

Dev Maitra, CEO of Dubai-based Indigo Properties, says what makes
Dubai property market unique from other parts of the world is that the cycle tends
to be shorter and faster

What stage of the cycle Dubai property of building materials and construction the demand of rising population, a 1199
market is in currently, and how has this have gone down. large chunk of which still prefers to rent
influenced your market strategy? Dubai residential property prices housing. Because of this, rents in many
continue to soften faster than the rents areas have either remained steady or have
Real estate market is cyclical in nature, in many areas. How do you see this even gone up. I think this is a sign of a
like any other industry. However, what paradoxical trend? maturing market.
makes Dubai property market unique
from other parts of the world is that the What drives the value of real estate Going forward, do you expect
cycle tends to be shorter as the cycle turns fundamentally is demand and supply. developers to focus more on affordable
much faster, on the back of the strong However, there’re many factors at play or mid-range housing rather than on
growth opportunities that Dubai property behind this demand dynamics — such as luxurious properties?
market offers. We’re already in the bottom- investor sentiment, growth prospects and
end of the cycle and the wild distress has population. Supply on the other hand is There’ll be demand for both property
been eliminated. Given the slow but sure generated by the developer launching the segments. Dubai has the highest per
revival in crude oil prices in recent months, project. Over the last few years, authorities capita millionaires in the whole world and
I believe Dubai property market is now on in Dubai have been taking steps to it’ll always attract luxury property buyers.
the cusp of a steady upturn, unless some restrict speculations and which allows Along with luxury properties, I believe
black swan events take place. Therefore, it only serious developers to remain in the affordable properties would always be
is a good time to buy now, especially from market. While these steps are welcome, one of the key drivers of Dubai properties
the end-user perspective. Having said they have created supply side limitations going forward.
that, the current market conditions have in the market, which have failed to meet
benefitted us as a developer as the costs

April 2016 | www.wealth-monitor.com

PORTFOLIO | Interview

“Project financing has
never been an issue for us”

Rizwan Sajan, Founder & Chairman,
Danube Group, says if a project is offered at
right price, at right payment terms and at right
location, there’ll always be buyers in the market

Please take us through the current and upcoming projects of
Danube Properties and your business model.
Danube Properties’ first project was ‘Dreamz’ that was launched
in June 2014, comprising of 171 townhouses. Subsequently, last
year, we launched ‘Glitz Residence’ 1, 2 and 3; all located in Dubai
Studio City and have almost 850 apartments. The latest project
which we just launched in January this year is ‘Ritz Residence’,
located in Al Furjan and offering 454 units. Hopefully, in April we’ll
be launching another new project in the same Al Furjan area and
almost on the similar design and patterns of Ritz project.

Since beginning, Danube Properties’ focus has always been to
cater to buyers looking for affordable property, especially those
who’re currently paying rent, and thus enable them to own their
apartment by offering them more value for their money. We’ve
received tremendous responses for all of our projects so far
simply because we offer more value to our customers through
two of our unparalleled offering. The first is the flexible payment
terms. As per this plan, buyers of our property can pay only 25%
upfront within 60 days of booking and the balance 75% can be
paid in 75 equated monthly instalments of only 1% per month.
The second way through which we create value is by offering
not just furnished apartments but expandable living rooms as
well that can be converted into a bedroom. While sofa and wall
cabinet make a wonderful addition to our living rooms, buyers
can easily unfold the expandable sofa and pull down the wall
cabinet to use it as a bed.
What’s encouraging you to launch projects in current times
when everybody is talking about slowdown?

200 We believe that if a project is offered at right price, at right

payment terms and at right location, there’ll always be buyers in
the market.

www.wealth-monitor.com | April 2016

PORTFOLIO | Interview

Many potential investors have a view tough market conditions of 2008-09. 5.13
that buying off-plan property has risks This coupled with the fact that our forte
associated. What‘s your take? in building materials further gives us a billion
It all depends on which off-plan 10-15% cost advantage, that’s transferred
development the buyers are investing in. to our customers. This also gives an edge
If investment is made in a right off-plan over other developers operating in this
project, it could turn out to be better than market since most of them have to source
buying ready-for-possession properties. building materials from us.

Do you believe the rent-to-own How do you plan to fund your projects “In 2015, our 2211
schemes are catching up with going forward? Will you be looking
developers and buyers alike? to raise funds through own equity, or turnover
Buying a house in Dubai is often a better you’ll be exploring external funding was AED
idea than renting one, especially for the such as bank loans? 5.13 billion
expats who are going to stay in Dubai for a At present we don’t require external and this year
long time. However, in case after spending funding as our financials are very strong. we expect
5-6 years or more, if buyers have to go We’ve enough cash flow to plough back to grow at
back to their home country for any reason the profits in the development of new another
whatsoever, they can get relief from the projects. Our approach is to go slow
fact that there’s always an exit clause in and finish one project at a time. It’s only 15-20%”
the property agreement whereby they can when we finish selling off a particular
sell that apartment to another buyer at the project that we go for another one. This is How do you describe your leadership
prevailing market rate. unlike other developers who’re launching style and what advice do you give to
What is the biggest challenge facing multiple projects at one go, which future CEOs?
the UAE’s and the region’s real estate makes it difficult for them to execute and I usually remain calm and cool even under
market? What sort of hurdles you are handover all projects within the deadline. pressure. I also believe in delegating
experiencing in the current market the right tasks to the right people.
situation? With the crude oil prices slightly Most importantly, I trust my employees
For most developers, the biggest jumping back to $40 levels and equity and expect them to carry out their
challenge in current market conditions markets in the recovery mode, do you responsibilities effectively. For future
is to sell their inventory. In so far as have plans to go for public listing/IPO? entrepreneurs, I would advise them to be
we’re concerned, we haven’t had to face sure of the market they are venturing into.
the selling pressure and liquidate our Ours is a small family business and we If one wishes to do business, never ever
properties. We’ve successfully overcome don’t have plans to go public. In the future start off without first going into the detail
the market challenges simply because of we may go for it, but not at present. In of that business. It’s very easy to start a
the brand equity that we have built up fact, we’ve never felt that we should go to business but equally difficult to sustain it.
over the last two decades. Our buyers, a stock exchange to raise capital. So go gradually, go slowly and there’s a
investors, and stakeholders trust in Danube Group recorded an annual way out.
Danube brand and that’s the reason turnover of AED 2.3 billion in 2014, with
why they invest in our projects. Several a 15% increase year-on-year. How has Of all the gadgets you own, which
developers have dabbled in affordable been the performance in 2015? one you prefer the most? What’s your
property segment, but unfortunately In 2015, our turnover was AED 5.13 billion favorite pastime?
many of them could not be as successful and this year we expect to grow at another My favourite gadget that I still like to use
as we are. 15-20%. is my Blackberry because of the speed
Many players in the region’s real estate If you could share one factor behind and ease of typing on the keyboard.
sector are struggling to maintain Danube Group’s success so far, what Socializing is one of my favourite pastimes.
a positive cash flow in the current would that be? I like to go out to parties and meet friends
scenario. How are you optimizing the I’ve a strong conviction that working with and on weekends, I don’t forget to catch a
cash flow management? complete sincerity always pays off. One movie. My day starts with swimming and a
For us, arranging project financing has shouldn’t try something extraordinary bit of workouts. For social networking I am
never been an issue because of our strong unless one is really a genius. Lot of mostly on Whatsapp and Facebook.
balance sheet. We’ve been working on entrepreneurs planning to launch own
good terms with banks in the region company give all-out effort to grow too
for a long time and that has established fast or do something which is against the
a strong relationship of mutual trust. market trend. That’s the reason why many
We have never had issues in repaying of them fail. I believe that an entrepreneur
loan back to banks, even during the must strive to do business thinking of not
how much money he is going to make if
he is successful, but instead how much
money he would be losing if he fails.

April 2016 | www.wealth-monitor.com

11th Annual

11 & 12 April 2016 Dubai, United Arab Emirates

PRUDENT PRACTICES
FOR GLOBAL GROWTH

KEYNOTE SPEAKERS

Abdulla Mohammed Al Awar Dave Matcham
Chief Executive Officer Member of Executive Committee
Islamic Insurance Association of London
Dubai Islamic Economy Development Centre
(DIEDC) (IIAL)

“Strengthening Takaful as a key pillar “New Horizons for Takaful
of the Islamic ecosystem” - Opportunities in Takaful in the UK”

WTC 2016 to feature exclusive launch of groundbreaking
“Finance Forward World Takaful Outlook Report 2016”

@WorldTakaful, #WTC16 | WTC16.COM ORGANISED BY

For Partnership opportunities, please contact us at: www.wealth-monitor.com | April 2016
[email protected]

MARKETS C SMOS

In this section, Wealth Monitor analyses news and data from the regional and international
financial markets with specific focus on precious metals, base metals, energy, agri/soft,
currencies and Arabian bourses

Energy

Precious Metals

Currencies

Precious Metals P.24 Arabian Bourses
Agri/Soft
The Bull is Back Base Metals

Base Metals P.26 23

The Cycle hasn’t Turned Yet

Energy P.28

Crude Awakening

Agri/Soft P.30

Closing the Gap

Currencies P.32

Dollar Doings

Arabian Bourses P.34

Technical Analysis: TASI, ADI & DFM

DGCX Data P.37

Global Single Stock Futures

April 2016 | www.wealth-monitor.com

PRECIOUS METALS | Consolidation

Precious metals are on the rise after the US Federal Reserve struck a dovish tone that
sent the dollar sharply downward. The prices however remain vulnerable to the global
economic stance

Precious metals, lead by gold,
continued to enjoy their share of
limelight into the month of March
amidst the global economic slowdown.
With the Chinese Premier Li Keqiang
announcing a targetted range of GDP
growth at 6.5% - 7% for 2016 and
abandoning a guidance towards the
trade target, underscoring the degree

24 of uncertainty around global growth,

sentiment surrounding precious metals
is expected to remain buoyant in the
immediate to mid term future.
www.wealth-monitor.com | April 2016

PRECIOUS METALS | Consolidation

Silver Unable To Keep Pace With Gold 22

1400

Gold Prices ($ / troy ounce) 1350 21 Silver Prices ($ / troy ounce)
1300 20
1250 19
18

1200 17
1150 16
1100 15
14

1050 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 13
Jan-14 Mar-16

Gold Inches Up Silver Gains Platinum Supply-Demand Balance
In what may seem ironical, Moody’s While silver has often been viewed as
Investor Service downgraded the ratings the cheap proxy to gold, it has not really (‘000 oz)
for Goldcorp Inc, the world’s 3rd most traced the path gold has followed. We
valuable gold miner to the lowest outlined the gold/silver price ratio over 0 2013 2014 2015 2016f
investment grade with a negative outlook the last 5 years to put this in perspective.
on a day gold prices surged to the highest As seen, it has reflected a steady upwards -100 -135
level in the last 12 months. Conquering trajectory. In fact, for the 3 months into
the $1280/oz level, the yellow metal the current calendar year, the same moved -200 Sources: World Platinum Investment Council
continued the upmove which commenced from 77 to 82 currently, indicative of gold
from the beginning of the year. Investors clearly winning this race. Proponents of -300
who abandoned gold in recent years, a an undervalued silver seek refuge in its -380
reason for the dismal fortunes at Goldcorp significantly higher proportion of use in
Inc., have started to return and with prices industrial activity. However, with global -400
holding up, short-lived corrections and growth expectations subdued, it would be
less of a threat from the stock markets, a wait before Silver dons that role. Till then -500
which remains mired in uncertainty,
there is a growing belief on the interest -600
towards gold as an investable asset class
continuing in the coming months. -700 -720 -725

Source: World Gold Council; World Platinum Investment Council; Investing.com; Wealth Monitor Intelligence Support to this buying is expected to -800
continue from the Central Banks across the
world. 2015 saw Central banks purchase The platinum market Platinum’s Comeback 25
588 metric tonnes (mt) of gold, the 6th is forecast to have The month of March saw platinum gain
year of continuous buying, amongst the a deficit of 135 koz ground, conquering the $1000 per oz level
longest spree of buying on record. As per (‘000 oz) in 2016, after having touched a 7 year-low of $812
the World Gold Council, Russia and China smaller than the per oz in January. The World Platinum
dominated the Central bank purchases deficits in the prior Investment Council in its quarterly report,
during 2015. As Central banks around the three years platinum Quarterly Q4 2015, released
world adopt negative interest rates in an earlier in the month highlighted the
effort to stimulate economic growth and it is expected to largely enjoy the tag of a challenge in outlining the price softness of
target higher inflation, gold is expected pillion to the rally in gold. An event worth platinum over the last 3 years; this, inspite
to continue playing role as an economic highlighting during the month of March of a deficit in the market. This is unlike the
shelter. With a near 19% appreciation for has been CME Group introducing China trend in most other commodities which
the current year, it would be interesting Construction Bank as an official member have seen prices decline in light of a
to see how the move continues from here in the silver pricing process, thus adding surplus indicated by their supply-demand
given the metal has not been known to another feather to China’s cap donned in status. The platinum market is forecast to
register the stupendous growth rates the commodity market globally. have a deficit of 135 koz (‘000 oz) in 2016,
equity markets record on rebounds. The smaller than the deficits in the prior three
highest annual return recorded over the years. Further in an observation, they note
last 10 calendar years was 28% in 2007. that in the last 40 years, platinum prices
have only 4 times been at a discount to
gold for a sustained period. In all these
instances, the price has recovered strongly
in the subsequent year.

April 2016 | www.wealth-monitor.com

BASE METALS | Price Recovery

26 Some base metals have seen short-term rising trend.
But is the metal sector really turning around?

www.wealth-monitor.com | April 2016

3.1

2.9 BASE METALS | Price Recovery

2.7

2.5

2.3

2.1 3.1 50000 Nickel Futures (LME $/Tonne)
1.9 2.9
1.7 2.7 Copper Prices ($/Pound) 45000 Monthly Highs Since Jan 2007

2.5 40000
2.3
2.1 35000
1.9
1.7 30000

25000 Sources: Investing.com

20000

15000

10000

5000

Jan-15 0
Feb-15 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan
Mar-15 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16

Sources: Investing.com; International Copper Study Group; London Metal Exchange; Commodities Market Outlook, World Bank; Goldman Sachs Group March Release The falling price trend in base metals This downward revision, they highlight has metal which again has suffered in light 27
which dominated most of 2015 been made for both supply and demand, of an industry burdened by overcapacity
crept into sentiment for the early in view of global weaker economic and stagnating demand across primary
part of this year. Concerns around the outlook, project delays and price related markets is expected to see a gradual
global economy, dominated by the production cuts. halt. The Goldman Sachs Group, which
negative sentiment surrounding the Nickel Slides outlined its views around commodities
Chinese economy in particular, led to a While commodities have had it difficult during the month envisaged a slide as
direct fallout in demand and prospects over the last few years, few metals much as 20% in the prices of Aluminum
for industrial metals. While prices have have had it as difficult as Nickel, a key over the next year. According to the data
recovered since then, it would be ingredient in stainless steel, which trades released by the International Aluminum
imprudent to opine that the cycle has a level close to the lows seen at the peak Institute, China produced 2.48 million
turned. While February saw a broad-based of the 2008 global crisis. Nickel futures metric tons of aluminum in January 2016,
rally across the commodities market, prices at approximately $8600 per metric a YoY decline of nearly 4.5%. This is the
March has seen some level of cynicism ton currently seem a distance away from second consecutive month where Chinese
creep into sentiment prevailing around the highs of $49700 per mt levels seen in aluminum production has fallen, an event
the bounce back buoyancy. The year April 2007. It is of little surprise that China not seen since December 2010.
remains heavily laden with economic remains the major reason for Nickel’s Zinc Prices Jump
events and related data is expected to woes. With the country accounting for Zinc prices have recovered on the back
continue to dictate the sentiment around nearly 30% of global consumption, price of strong fundamentals. The month of
the base metal markets. trend remains inherently correlated to the February saw prices rebound 8% seeing
Copper Recovers sentiment around the economic reality. some cool off in March to the current
Copper prices reversed the downwards Besides, Nickel stockpiles continue to levels around $1750 per mt. This has
trend which continued during the mount – at 441,912 metric tons as on end been aided by significant supply cuts by
beginning of the current year and have February for the London Metal Exchange Glencore and a consortium of Chinese
seen some price stabilization come in. The (LME), they stand at nearly 3.5 times for smelters. Stock piles at the LME at current
fallout of the near 25% price correction the same period in 2011. The World Bank levels around 459,000 mt continue to
during 2015 has been witnessed in a in its quarterly update, ‘Commodities trend lower – to give a perspective,
number of producers cut production or Markets Outlook’ published in January warehouse piles in 2013 stood at over 1.2
completely suspend output. Results for 2016 predicted a 16% drop in prices for million mt. While demand has trended
Antofagasta PLC, amongst the top 10 the current year – given the woes around lower as is the case with most other
producers of copper miners worldwide, the metal including a glut of supply, there metals, supply growth has fallen more
which reported a pre-tax profit of $259 is little to suggest a reversal of the long sharply which is leading to expectation
mn over 2015 from $1.5 bn, a year ago are term bearish trend which has gripped the of the industry seeing a deficit for the
a stark reflection of the year gone by and metal. current year. With mining company
the hit the industry has taken. Aluminum Rises MMG declaring the end of production at
Aluminum prices too have enjoyed the Century Mine, one of the world’s largest
As per the recently released outlook ascent seen across metals since late zinc deposits earlier and Horsehead
by the International Copper Study Group January, with the metal moving towards Holding Corp, a leading US zinc producer,
(ICSG), the global refined copper market is its highest price point seen since October operational for around 150 years filing for
expected to remain ‘essentially balanced’ 2015. However, the rally around the Chapter 11 bankruptcy in February, the
in 2016 compared with a previous forecast supply side constraints are expected to
in October for a 175,000 tonne surplus. see prices supported going ahead.

April 2016 | www.wealth-monitor.com

ENERGY | Rebound

While crude oil is expected to trade with a positive
bias, fresh longs should be avoided at elevated
levels, says Dharmesh Bhatia, Manager -
Commodities Market, Emirates NBD Securities

Last month, the international bench-
mark Brent crude jumped by 5%
and quoted at $37 while the US
benchmark WTI (West Texas Intermediate)
reached at the peak of $34.69. However,
later this rally was supported by funda-
mentals and prices rallied further. Major
upheaval in prices has been witnessed
so far during the current year. The Brent
was dropping to a 12 year-low of $27.10
a barrel in January before embarking on
an uneven recovery. Daily swings of more
than 7% have been recorded on four
occasions in February alone. Between
2012 and 2013, when oil averaged close to
$100 a barrel, there was only one trading
day when Brent moved 7% over the entire
period.

In the second of weak of March, 5%
jump was witnessed with assumption

28 about supply crunch in the global market

because of disruptions in the pipelines
of Iraq and Nigeria. The stoppage in the
pipeline of Turkey cut off about 600,000
www.wealth-monitor.com | April 2016

ENERGY | Rebound

Crude Oil Price Over The Current Year Crude rose as high as $39 per barrel, the
highest level since December 7, 2015.
($/bbl) Crude has witnessed a sharp rebound
41.12 since hitting a 13 year-low of $26.05/bbl
in early February. Crude has benefitted
36.76 37.9 36.34 from improved risk appetite amid hopes of
additional central bank monetary easing
33.75 measures. Also supporting the price are
prospects of easing supply amid slow-
31.41 33.62 31.48 Sources: Investing.com down in US crude production and OPEC’s
production freeze. While we expect price
30.02 32.19 29.69 30.6 to trade with a positive bias, fresh longs
should be avoided at elevated levels.
4-Jan 11-Jan 18-Jan 22-Jan 29-Jan 8-Feb 15-Feb 22-Feb 29-Feb 7-Mar 15-Mar 22-Mar
ICE Brent crude rose 4.3% last week and
spread between WTI and Brent crude nar-
rowed to near $0.3/bbl. WTI may remain at
a discount as optimism about US economy
will be countered by higher US supply.

barrels a day of crude from Iraqi Kurdis- Highlights of Crude Oil Stocks and Demand 29
tan for the past two weeks, with reports in March 2016 The US Energy Information Administra-
suggesting the line may not be back until tion’s (EIA) weekly report noted a 3.88
the March end. The leakage in the pipeline • NYMEX crude rose 7.2% marking its million barrels increase in US crude stocks
of Nigeria Royal Dutch Shale Company fourth weekly gain largely in line with market expectations
has been described as ‘force majeure’ and of 3.9 mn bbl rise. Stocks have reached a
the production of daily 250,000 barrels • Crude remains supported by improved fresh record high level. Stocks at Cushing,
Forcados crude has been suspended. No- risk appetite and prospects of lower the delivery terminal for NYMEX crude
body knows when this production would supply futures, rose to a fresh record high level of
resume. 66.9 million barrels. US crude production
• ECB announced spate of monetary was largely unchanged at 9.078 million
Brent crude may witness monthly easing measures; Draghi does not see barrels per day after six weeks of decline.
price increase, first time since October, more cuts US crude production has fallen to the low-
as 850,000 barrels per day production of est level since November 2014 due to drop
above two countries would be out of the • China’s crude imports rose 19.1% to in rig count. The number of rigs drilling
market which constitutes less than 1% of 31.8 million tonnes in Feb for crude fell by 6 to 386 rigs, the lowest
the total global demand. Talks are being level since 2009. EIA however noted a
held between Russia, the biggest exporter • Iran will join production freeze once bigger than expected 4.526 million barrels
country outside OPEC cartel and Saudi its production reached 4 mn bpd, said decline in gasoline stocks and 1.119 mn
Arabia, the biggest oil producing country Oil Minister bbl decline in distillate stocks. Demand
in the OPEC to reach at an agreement for rose in the report week. Crude demand, as
production freeze, though it is yet to win • Oil prices might have bottomed out, measured by total product supplied, av-
the support of all OPEC members. During said International Energy Agency eraged 19.864 million barrels per day, up
a major industry gathering in Houston 3.5% from a week ago. Gasoline demand
last month Ali al-Naimi, Saudi Arabia’s • The US dollar index fell 1.1% marking rose 3.2% to average 9.411 mn bpd while
oil minister, ruled out the possibility of its second weekly decline distillate demand rose 10.2% to average
cutting output, damping hopes of more 3.706 mn bpd.
aggressive action to curb a glut estimated • The number of rigs drilling for crude
by some traders to be as large as 2m b/d. oil fell by 6 to 396 rigs, lowest since WTI crude May contract traded at a dis-
2009 count of $0.3/bbl to Brent crude as against
However, Eulogio Del Pino, Venezuela’s a discount of $0.97/bbl a week ago. WTI
oil minister said that Qatar, Russia and • EIA noted a 3.88 mn bbl increase in crude outperformed Brent amid signs of
Saudi Arabia will hold a meeting in March US crude stocks for the week ended slowdown in US crude production and
to discuss efforts to stabilize oil markets. March 4 continuing decline in US crude rig count.
On the other end, Baker Hughes, the US Brent was affected by countering view of
rig count company stated that the US rig • WTI crude may remain at discount on OPEC and Iran over production freeze. WTI
drilling number at the week ended on higher US supply will remain in discount against Brent and
19th February reduced from 413 of the spread may remain below $1/bbl. We may
previous week and remained at 400, which hedge funds have considerably reduced see some volatility on position squaring
were 986 during the corresponding period their net short position recently. near contract expiration of NYMEX April
of the last year. Under the direct impact contract.
of all these news, money managers and NYMEX crude oil trades near $38 per
barrel after a sharp 7.2% gain last week
which marked its fourth weekly gain.

April 2016 | www.wealth-monitor.com

AGRI/SOFT | Signs of Stabilization

Agri-commodities prices continue to remain under pressure.
However, the gap between global supply and demand is
expected to narrow this year

30

www.wealth-monitor.com | April 2016

AGRI/SOFT | Signs of Stabilization

While the initial part of the year 85
has seen buoyancy within
commodities at large, the Bloomberg
agri-commodities segment continues to 80 Agriculture Index
remain under pressure. The Bloomberg
Agriculture Index, a representative index 75
Sources: ; Commodity Markets Outlool, World Bank; Food and Agriculture Organisation; US Department of Agriculture; International Rice Research Institute; International Sugar Organisation; International Cotton Advisory Committee comprised of eight farm products has
seen a 4% decline in the current year as 70
Sources: Bloomberg Indices; Investing.comon February end. While March has seen
the gauge regain lost ground, as seen 65
from the chart prices have had a fairly
dismal run over the last few years with 60
the broad trend being downwards. The
index slumped to a 7 year-low recently. 55
As highlighted in the January 2016 report
Commodity Markets Outlook, World 50
Bank, agri prices are projected to decline
1.4%, with declines in almost all main Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
commodity groups, reflecting adequate
production prospects. 2014 2015 2016
Wheat Glut
Making its first global production nearly 41 mt in 2013. Of these, significant high prices exacerbating fears caused 31
forecast for wheat in 2016, the Food and concern centers India’s deteriorating grain by crop concerns, continue to haunt the
Agriculture Organization (FAO), estimates situation is particularly worrisome to the pulses segment. Besides with the winter
the year’s harvest at 723 mt (million market. crop ready to harvest from April, increased
tonnes), marginally lower than the record Soybean Strengthens availability is expected to keep prices
hit in 2015. The European Commission USDA analysis highlights a preference under check.
highlighted that unsold wheat inventories amongst farmers towards corn over Sugar Sweetens
within the European Union, the world’s soybean owing to favorable input prices. February 23rd recorded intra-day raw-
top wheat producer, will reach an 8-year It estimates, U.S. soybean plantings at 82.5 sugar prices surging the most in nearly
high as on end-June 2017. All of this
underscores the fact that the wheat Coffee prices in the 22 years after the International Sugar
industry is seeing a glut of supply, which near term are poised to Organization (ISO) increased its
is expected to continue going ahead. climb aided by what is forecast for a production deficit in the
Prices have remained largely range increasingly being referred current crop year amidst increasing
bound for the initial part of the year and to as the strongest El concerns about the impact of the El
this trend is expected to continue going Nino effect in almost two Nino weather pattern on supplies.
ahead with a downwards bias. decades ISO estimates world production in the
Rice Price Stabilizing 2015-16 period will trail consumption
In its February 2016 released report, the million acres, approximately 200,000 acres by 5.02 million metric tons (mmt)
U.S. Department of Agriculture (USDA) lower than their estimate one year ago. compared to a November estimate of
expects global trade in rice to continue a 3.5 mmt shortfall.
declining for the second consecutive While soybean and corn prices exhibit a Cotton Poised to Rise
year in 2016 — a reflection of reduced high degree of correlation, sentiment does According to the International Cotton
exports from India, Australia, Cambodia, favor the corn industry. Prices in the exhibit Advisory Committee (ICAC), global
and the U.S. Added to this are the reduced reflect the outperformance of Corn prices cotton stocks, currently at record levels,
imports by Nigeria, the world’s second- in recent times. At around $365/bushel, are expected to fall 8% to 20.4 mt in
largest rice import market after China. Rice corn prices continue to remain range the 2015-16 crop year, with production
imports by China have been at record high bound given the average price of $376 / declining 15% to 22.2 mt. Inventories in
levels since 2012 and are expected to grow bushel since January 2015. China, whose stocks account for more
4% in 2016, reflecting prices that are lower Pulse Spikes than half of the world’s total, are forecast
in the global market than the domestic The aftershocks from what has come to be to fall 7% to 12 mt, while stocks for the
market. Despite the current stability in referred to as the ‘Dal Shock’ within India, rest of the world are predicted to fall 9%.
the rice market, there are reasons for a result of hoarding by traders to extract The ICAC cut price outlook to 70 cents
concern about the medium-term (mid- a pound, the weakest season-average
to-late 2016) direction of the market. The price since 2008-09. Coffee prices in the
rice stocks of 5 major exporters including near term are poised to climb aided by
India, Thailand, Vietnam, Pakistan, and what is increasingly being referred to as
the U.S. continue to slide since peaking at the strongest El Nino effect in almost two
decades.

April 2016 | www.wealth-monitor.com

CURRENCIES | Dealing With Divergence

Different monetary policy stance of
the ECB and the Federal Reserve is
creating volatile conditions in currency
markets, says Abhishek Goenka,
Founder and CEO, IFA Global DMCC

In February, the Indian rupee weakened
against the dollar and, for the month,
closed at fresh record low levels. And in
line with its past performance in March
the rupee managed to appreciate against
the dollar. The Reserve Bank of India (RBI)
Governor in its previous policy meeting
has been vocal and stated that the central
bank wishes to curb the volatility of the
rupee rather than protecting a level,
either on the downside or on the upside,

32

www.wealth-monitor.com | April 2016

CURRENCIES | Dealing With Divergence

for the currency. It was not only the RBI 10 3 Months Spot Price Return
that helped the rupee appreciate but at 8.80
the same time in March the FIIs bought (18-Dec-2015 to 17-Mar-2016)
a total of $1.5billion (as on 18th March) 8 7.60
in the equity segment. The rupee gained 6.70
despite marginal fund outflows flows of 6.30
$152million from the debt segment.
6 5.70
On the domestic front, India’s Union
Budget triggered the appreciation move 4.70
after the finance minister announced that 4 4.20 4.10 3.90
the fiscal deficit could remain in control
with the government estimate. Weaker- USDJPY (Short $)
than-expected industrial production USDCAD (Short $)
number in the last couple of months AUDUSD (Long AUD)
raised expectation that the RBI could cut USDIDR (Short $)
rates before the next RBI policy meeting USDMYR (Short $)
scheduled April 5. Inflation that the RBI USDSGD (Short $)
continues to keep an eye on remained USDRUB (Short $)
in check in February despite an uptick in EURUSD (Short $)
prices of pulses. USDTHB (Short $)
USDCHF (Short $)
USDTRY (Short $)
USDPHP (Short $)
USDKRW (Short $)
USDHKD (Short $)

USDCNY (Short $)
USDINR (Short $)
USDZAR (Long AUD)
GBPUSD (Short $)
2.60 2.40 2.40 2.40
2

0 0.00
-0.10 -0.50 -0.50

-2

-2.80
-4

Central Banks Continue To Ease in January as it stepped up its efforts to numbers, employment and inflation
Last month, major central banks released revive growth and pull Japan out of years figures, to monitor and to determine the
their policy statement and most of them of deflation. overall strength in the economy.
continued to remain on the easing path Outlook
following volatility in the emerging In line with expectation in its March The year 2016 had begun on a negative
markets that has weighed on the global meeting, the Fed decided to hold after note with sell-off in global equities as well
growth. Starting with the ECB, the central raising rates in December for the first time as in major commodities. But steps taken
bank lowered its benchmark rate to zero since 2006. The greenback came under by major central banks have supported
and also lowered its deposit rate further pressure against its major crosses after the these riskier assets on lower levels.
Fed lowered its forecast for growth and From base metals to energy, most of the
commodities have started to rally since
Last month, major central banks released their the start of March following steps taken by
policy statement and most of them continued to the central banks. The RBI will be releasing
remain on the easing path following volatility in its policy statement on April 5, wherein
the emerging markets that has weighed on the expectation is high that the central bank
global growth could cut rates by 25bps that could extend
gains for the rupee against the dollar.
into the negative territory. In line with inflation. In the past, the central bank has Fund flows in the Indian equity and debt 33
expectation, the central bank lowered its been vocal about its focus on improving segment could further support the rupee
deposit rate to (-) 0.40% from (-) 0.30% employment and also take steps to take on lower levels.
and at the same time expanded its inflation higher. June certainly seems the
quantitative easing to €80 billion from €60 month when the Fed could raise rates On the global front, China’s GDP
billion. The ECB also lowered its forecast but the central bank will continue to number will be an important number to
for growth and inflation suggest that the monitor the economic data that will be watch for especially after the measures
steps taken previously by the central bank released in the coming months. Forecast taken by the PBoC. A pickup in the real
have not been as effective as expected figures suggest that the rate hike pace estate prices in China suggests that the
previously. After the announcement the could be slow as two rate hikes compared PBoC’s stimulus is working its way in the
euro came under pressure against the to the four anticipated earlier. On the real estate market. Under the banner of
dollar but despite the increase in QE the economic data front, inflation for February prudent policy, the Chinese central bank
euro rebounded from its low. contracted 0.2% compared to unchange in has cut rates six times since November,
the previous month. The Federal Reserve 2014 and at the same time has reduced
On the other hand, Bank of Japan will continue to monitor economic the amount of cash that commercial
continues to hold rates near record lows numbers until the next meeting scheduled lenders must hold as reserves. On the
and in its latest policy meeting the central in April. Until the next policy meeting the other hand, advance GDP number from
bank governor hinted towards further rate Fed will have just one month’s economic the US will also be crucial to gauge further
cut in a view to support the economy. The trend for the greenback against its major
BoJ had cut rates into negative territory crosses.

April 2016 | www.wealth-monitor.com

ARABIAN BOURSES | ATDASI ITTeecchhnnicicaal lAAnnaalylyssisis

BSHEAORRITSTHERM AADDXX
ADXRECOMMENDATIONS:

RECOMMENDATIONS:

LongLotengrmtertmratdraedresrs

M- NaorkLeo-MtnNsagotrkrLpoeotnonssggtirltpoyinoobsgnieltsyiaobrneissahrish

Weekly charts continue to reflect a a medium term reversal above Daily MLeodinugmtteermm ttrraadderesrs
strong downtrend, with the market top at 4600 would postpone the MMaerkdetius-MtNmra-MoorkNnLaetogotrnelksyLgterrobpotmnnoessggatiltrryitpoiosbrnnohesasgairldtiysihoebnressarish
correction finding resistance below
4600. decline and allow for medium term - No Long positions
long positions. Bearish momentum
Momentum in the medium has is expected to return towards a Short term traders
turned Bearish after the upwards rally deeper correction, as long as the
reached exhaustion below the 4600 market remains below 4600. The MMaerkdetiusStmrhonotgrelWtytorbaitmnieteiitanirargtitmsferohnareatdwrreepatroradscsiteeimonressnt
resistance level, forming recent Daily
top. recent reaction has shown signs of - No LonWg paoitsinitgiofnosr a retracement
In the short term the market weakness in the downtrend, with to initiate new positions
has breached below initial pivot
the break above previous Daily top
paliumegnavgtmtetirleleessrdsinagsifsaintvetbseereomfuloofposrwwmuvpe4ain4prEhdg5oams0rsBtc,aepwoaaiornlhre:stietsiicnpnhroeuofrnoaanef@tnveiiroedmtrnraseaanddl .epedtttraihhimaiees.eilmcno, ogwnamkgchiointl|neegWrf.timdhHeeeoBbnwmo:cTteewetevodtwleom:iurw+tmahc9.toetr7ctuaeBu1lrddurmr4leeblsnpte3rtteeh5innda2dtia6.6co1m8
“Long and medium term traders remains Bearish, initial short term SIGNISSFI12CASNh44To21rL05tE00VteELrSmPP:rrootjjreeaccttdiiooennrLLseevveell
RR44212105tWo00ai44niti86itni00ag00tfePPonrrreaoowjjrRDeeepeatccrotittalrsyiicaiootecTinnmeoomnpeLLsneeetnvvteeLllevel
continue to be neutral while trend targets are loeuvtelilns.e“Md aat rthceh422309a,n2d016 S1 Source: Tradepedia: Data as on March 29, 2016
characteristics remain Bearish. Only 4050 pivot S2

CURRENT PR.CLOSE CHANGE 52 W HIGH 52 W LOW 30 D ATR 40 W ATR R1 RR4421486200544000335200 DRPeartiolryjaecSSTceo12tmipoen44nL22te73Lv00eevlel
-0.55 % 4901.05 3736.95 51 118 RS21
4274.45 4274.45

nd, SEC  S2 R341040380 ProjeSc3tion4L0e5v0el
w
Trend LT EMA  RR11 43426000R4 4428*R-resistance; *S-support DSai1lyST4o4p2379035
er RRINR32T2RA44D33A485Y800P0IV0OT LERVSSeEt32LraSc:e44m02e35n00t Level
LT MACD 
nitial
s ST EMA 
oned
ST MACD 
34
Wave IMI 

RSI 

ROC  RR41 44432280 SS41 34923750

Histogram OS1 R2 4350 S2 4230
State

ROC OS1

R3 4380 S3 4050
R4 4428 S4 3935

*R-resistance; *S-support
Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

"Long and medium term traders continue to be neutral while www.wealth-monitor.com | April 2016
trend characteristics remain Bearish. Only a medium term

ARABIAN BOURSES | DFM Technical Analysis

DAILYAATDODPXXADXLong term traLdonegrsterm traders DDFMFM
DFMRECOMMENDATIONS:
AT 3400Market strongly bMeaarriksehtstronglybearish
- No Long position-sNo Long positions Long Ltoenrgmtetrrmadterards ers

MarketMsatrrokentgsltyrobnegalyribseharish
- No Lo-nNgopLoosnigtipoonssitions

Weekly charts continueLotonrgeftleecrtma traderressistance level at 3400. With the Long term traders
ssrceteorscrToiroshnetnecgadtnddiavcaoreeiywlywlleencavvthvereaeellsrnastadM-MuthnN,r3aadwpeor4skadi0eLetfsoM-x0ohtisnutN.rsiaetngmtohmrrngkpoeeLdenoiodinlttsgnonieslitaygntgtioirrnbgapotnmeloonostanesgM-MritriltNsymariehoorabkdnLeedostianusegrtmirrspop3mdahsnob4eatsge4tosieltdtypi0veoribienumrwtensemapirslttirlsherathceavneordidomrneeufccirshsresmtaDinlnltaBgiirnulaeyllallttiyhsod,hepoorwonaeulbnvytoetlarorvesbeonarkldeak MediMuMamrkeedtteiusrtmmronttgerlryambdetearraisdshers

Marke-t Ns-MtoNraoorLknoLegontlngsygtrpbpooenosasgiirlttyiiisoobhnnesasrish
- No Long positions

failure swing pattern with the break in the medium term. The extended Medium termSthraordtetresrm traders
hmaboeowdveieuvmperrettevreriomnudrsMMecDamheraakadireliaytincusttBtomereopraniSsirtgntihelsiyc3horsb2marei0nsat0rlttit,oshrehneargdmertsrWSacpDhaodreioetreicrnrveegrtiomcsftotueibrosarenmtrroert2preta0raca1aect5mhd3eiae2nntr0tgs30a2hb0a0os.vuwepetthahekeeTtnohepedof
as the market c3-o4Nn0ot0Lin.oungespobWseiatlioiotwinnsgnfeowr alyretracteoatmhilnteehitnisoatttureugnchetwuloprwoesieotirfonttrshoeudgohws rnetmreanidn M- NaorkLeotnsgtrpoWbSnoesghafiltoioytiroirenbntgeabLWsatoteftaornfeeoiigrtsmrrihrenpmepgoavsttfeitiotnetrirmosgrraneapnslvtdseeinirwgesganrnlssseiwgns
formed top at in
In the short term, downtowinairtdiaste new positpiolnasce. At current times, long and
Long positions
correction coming from the Daily top medium term traTderls: c+o9n7ti1nu4e3to52be6618
afotr3m4i0n0gisBeteasrtisinhgreinEviemtirasaSlasilhlup:opainprtttfoeorrt@tne,saSrttnmr1oaddtera4p2ed5danec0eiratusi.vtcraaotlePmusronl|ojleeWncsgtseiopabnob:Lsrwieetviawoeknlwasb..tHoravodewe3e4pv4ee0rdia.com SIGNIFWSIhCaSiAo1tiNrntgTtfL3oeEr2rVr4meEv0LetrSsr:aaldsIingetnrrassday Reversal
Lboe33RSRnfo21g221re04poa00stit333tei941mon230ps000tIRinnegttrrnaaeDPRdcwreaaeotiylmrjyeaRccTeteeonimovptneeLrLnesetavvLleeellvel
Source: Tradepedia: Data as on March 29, 2016 SS21 44125000arBbeneet“aueaTrrxcihnstteheivonlcafodutBneeregdrdaetbrnbeiesterlhlmayormwtioesohus3tmt2milno4Wtegoo0onavkistwnieuetrii.atcenmiroamgntntfeiaoondnirwngaeSRRarsawoPPy2r12refrrdptooarosajjseeci444teccimo681ttnii000eBmtiloosneon000ennvotwtaehmLLralieeerspedhvvmnrPRDseeoptreeaallvuortidiemlrjsdyeiashuic.csTnimt“eufoigtmorptetnaoeeniLnrsfmetueMevaLrxewterpahllvyieeterhcwrlctBtaehherdneatir32nois2gh9r4e0,su2m0e16 S1
S2

R1 4600 Daily Top SS12RR21 33213304RR94001223003333IR40ne00tPDtrraraaodicljayeeycmTtRoieSSopen21nvteLLrees33vav21ele84ll38
S1R2 424580003259.43 C-1H.1A9N%GPPERRrr12ooRjjeee54tcc2244r4ttWa733ii.ooc125H6ennI00GmLLHeeevvneetll52L26e2WSS1v.9e21L6lOW442273330040 D ATR
CURRENT PR.CLOSE 40 W ATR
139
S2 4100SEC 
3279.16

owntrend, Trend LT EMA  4320 DRRRea43tilryaSScT4421eo34mp2808e44n22t 73Le00veSSl 43 4050 IRRN*21TRRRR-RreAs132isDt33anA94cY333e23;RR*333PS0034-490IsVu000pOp33oTr43tLPD29Er05aVoilEjyeLcSSSTSto:321iopnSSL43333e102v784e23l893085793
ng initial 4350 3935
y level at R1 4600LT MACD 
R1ST EMA  S3 4050
ing RR22 4800ST MACD  S1S4 42379035
top in R3 4380Wave IMI 
medium RROSCI R1R443424028 S2 4230 R1R433304025 S1S432248853
R2 4350Histogram N S3 4050 R2 3340 S2 3183
ming from R3 3390 S3 3079
, and State R4 3425 S4 2853
ated ROC N
omentum
R3 4380
R4 4428 S4 3935

35

*R-resistance; *S-support

Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

April 201"6T|hwewwlo.wnegaltthe-rmmonoitourt.lcooomk remains Bearish currently testing
secondary resistance level at 3400. With the medium term

ARABIAN BOURSES | TASI Technical Analysis

DX TESTINGDDFFLODMMFNMGermtraders TTTAAASSSIIIRECOMMENDATIONS:

TERM RESISTANCEronglybearish

positions
Long term traders Long term traders

Long term-MNatorrkaLeotdnsegtrrposnosgiltyiobnesarish LonM-gNaortkLeeotrnsmgtrponotsgriltayiodbneesarrissh

Market strongly bearish

m traders The long term corrective wave -LNoonLMgoentdgeirtpuhmomesiDtttiraoeainrlydsmBeutrrlslaisdherresversal pattern. Market strongly bearish
iFrrneeibiastiocisahnttaeaendcdccfeaiirbliesdotveviemneltrptiehfoiteerrdat5ac3anes5mt0tMwheleoeneewt2dkf3rilhyo.u6amm%sM- NtahtoreekL-MeroNtamnorskgtLertolMtfpotiirrnqrsnoaeasgtusgirtdldipoiilttdniynoiuaeoagsgbrmirntlgteypeissoeabdtonteresishlrasiemtrhaivioslefhtnlorasofdtfooe6nr4egs0not0toirnayhg.naWdtvreiaitndhaietttishlaeaelaltyst
arish Med-LiuNomonLgtoentrgemrpmotsriattidroaendrssers

top of 9900 outlined in MMaaryk2e0t 1st5r.ongly besahrioshrt term consolidation ongoing LongMabaorvkee6t1s0t0rotnragileydbearish

oePPnrearrrwoomrejjpeetrotccasrttciiiateooimodnnneesLLnrteesvvtMtrtboicseeeaihofmollarscenIT“ftginoruTesthtnceontahrftihearttsmhiseahnxnao2aemteelcrl0rloeiesrdedede1nhavfai,6abbirgoeboret.peyelritofcnlrtapetotetghctlirhrwesoemeteeeEivirnsnn6nme6eBmacg5tlp2nlous,s30rmaatarloea0lir0sfiniepnsot,lcigep:hct-naM-MvlthrutrriehiNtNrientaaefshve,eeiioovrttafncevemkeidoidlouLLoederwfs@iooaanrriiuituunrrnsniarnsselsafkpggyvmgtgtoWLbStbWSnlreperoereahophtpotaaonfflondtfoyooiioogrttessrgrtieirreSSneinip.ltrttptyggoiai12amoosetttbtffnnittooeteedeessirrtsmOtpwwtBppamomrrihhrurrarenror33mmeneaiopiapeeeebWLSptasss.vv12rlhottevvvchhydiprnee6miaintf04eiiintntororifioosioo2agetsoinsgr00grarhitmr0rnuuaraenparanogrstntnl0lgssokpastiswddlsesesmttte|efldrsliiitowotwoeegteaegeteuvWoairmwvmonrsnrertprrirIRdnseeolmbsesnlsespesypu.sesvslwettdDbeaoturitwrnntreroaitatrm:osaagreTrortdpa5taatwcdwwnlueaeaae5eidaseslnrltywm0lietwdbltgge:aowh60dRn6rewrena+w1e,eseas5tnbcw99aiver.sl3nttetod0kexr7i0bgLaltn,sratoah1esesaewgbawdbavllnaeolr4lieoetronldextewellvwphtae3rpteeemekede4iua5nnst8odrsh2tdgl0hfyieoea06df..6co1m8 Medtiou6m19- 0Nt, oetarLrgmoentgitnrpgao7sd0i0tei0or. nss

Long above 6100 trailed

tMo e61d9i0u,mtartgWSeehtraioimntigrntgt7tr0feoa0rr0dmre.evetrrrssaadl seigrnss

Long above 6b1e0fo0retrinaitlieadting new long

to 6190,Stahrgoperottsiinttigoen7rs0m.00t.raders

le3vLe2ol,n4g0RRpo21sitircoeoI33nnsrs49irtser23taca00tdnivcaeey waRtDPae7ravvo0ieelj0y,er0tcsTat.M“aorioglpnaetLriencvgehslec2o9nd,a2ry016 Waiting for reversal signs

SIGNIFSSIC21ANpbWSoeTha66fsooiLi02ttrEiir00enoVtg00ninEtsfiL.eotSirra:PRmrteirenvetgetvrarrinoscaaeuedlwmsseBielgornnstnttsgolemvel
has reached initial resistance S1 RR2162pboe066fs0oi57tri55eo00ninsPi.triaePRtvireniotogrjeaunccsteiBwmonoeltoLntnetovgLmeelvel
coinciding with first target of S2 6000 Retracement level

Level
S1Daily Top Source: Tradepedia: Data as on March 29, 2016

Retracement

S2 3100 Retracement Level RRSS1212RR21 666666520734500541000062 PRRPrereoettrjvreaSSaioccc21teueimoms66n02Bee46oLnn09tetttvoLleeemvlveell
C-RRSSRR1RH.4121212A81N%GE333333339494120233204592800000008W5RRRRH4213IGHPDDRIP3333nrrea3334atootii4920rSlljrjayyee005055a123dcccTT9Wtate7ooiiyomoppL3nnOReW2eLLnv4eetSSSSevv8L43r12eees37llav09leD3323lA1820T7854R9833
S1 4270CURRENT PR.CLOSE R2 3340 S2 3183 40 W ATR
el S2 309
3el5SS043 42360286 6257

4050 SEC  R1R3 66545502 RetrSa3cem57e9n1t Level
Trend LT EMA  R2 6750R4 6518*R-resistance; *S-support ProjSec4tio5n33L4evel
R1 6346 S1 6240
3935 LT MACD  INRT2RAD6A4Y1P2IVOT LEVSEL2S:6069

ST EMA 

ST MACD 

Wave IMI 

RSI  R31 33900 S31 3027498 R31 6435426 S31 56729410
ROC  R42 654182 S42 65036394

s Histogram N R42 3432450 S42 2381583
State

ROC N R3 3390 S3 3079 R3 6452 S3 5791

36 R4 3425 S4 2853 R4 6518 S4 5334

0,
*R-resistance; *S-support

xt Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

www.wealth-monitor.com | April 2016

"The long term corrective wave has reached initial

Focus | DGCX

37

April 2016 | www.wealth-monitor.com

IN FOCUS | High Dividend Yield Stocks

Stocks having high dividend yields could result in steady stream of
cash flows, says M.R. Raghu, Managing Director, Marmore
MENA Intelligence, a research house specialized in MENA
economies and business issues with the focus on providing
actionable solutions

2015 could be marked as a year to result in steady stream of cash flows and a list of stocks that have been consistently
forget for most GCC investors as potentially generate better total returns maintaining a high dividend yield in the
stock markets witnessed double than those that do not pay any dividends. two major markets i.e. UAE and KSA.
digit losses on the back of a 35% fall in Additionally dividend paying stocks also
crude oil prices. However, with stocks tend to be less volatile than the non- On the whole the dividends paid out by
dividend payers as these stocks tend to the listed companies in the KSA and UAE
38 trading at cheap levels, high dividend be quality companies and generally show contracted by 8% and 14% respectively in
greater stability during unsteady markets. 2015. The decline in dividend paid out can
yields can be considered by investors Hence it might be interesting to compile be attributed to the fall in oil prices since
to consider investing into stocks. Stocks June 2014.
which have high dividend yields could

www.wealth-monitor.com | April 2016

IN FOCUS | High Dividend Yield Stocks

Despite the fall in oil prices the payout in KSA and thus affecting their margins. Dubai and Abu Dhabi have contracted
by the UAE companies in 2014 grew The shrinking margins transmitting into
by 19% compared to 2013. The healthy lower earnings growth and free cash flow considerably at 39%, 48% and 10%
payout by the UAE corporates during 2014 will affect the dividend payouts. Since
indicated the confidence in the long- raising capital has become an obstacle, respectively between June-2014 and
term growth potential of UAE due to its companies with deteriorating cash March-2016. Given lower valuations,
relatively diversified economy. profiles would have to choose between investors can expect capital appreciation
distributing earnings back to investors or along with dividend payouts and would
However, the scenario for the KSA retain for capital expenditure. However, make more sense to invest in such
corporates who operate in an economy it is more likely that companies would companies. The ideal dividend paying
which is not as diversified as UAE economy sacrifice parts of their dividend payments stocks in the ongoing turbulent times
has been different in 2014 where dividend to raise cash needed for operations and would be the ones that have healthy
paid out by the KSA corporates contracted expansion. balance sheet and have historically
by 8% (same as 2015). demonstrated dividend growth. Moreover,
The investors hunger for yields tend to such companies should also have the
Most of the companies that have paid
out high dividends during 2011 to 2015 in place a premium on the high dividend potential for growing dividends by growth

UAE belong to the insurance and banking yielding stocks. However, PE ratios for KSA, in free cash flow and earnings.
sector. Air Arabia, du and Ras Al Khaimah
Ceramics are the only exceptions. Majority Top Dividend Yield Companies - UAE
of the top dividend yielding companies
are small and large cap companies.
MCAP PE Ratio Dividend Dividend Avg Closing

Contrary to the stocks in UAE, most of the Company 2015 (Current) Yield Yld Dividend Price

top dividend yield stocks in KSA are large (USD Mn) (Current) (2015) Yld (2011-15) (AED)

cap. The high net income of the majority Waha Capital PJSC 1,134 7.3 8.9% 9.3% 9.1% 2.24
of these companies can be attributed
to the subsidies provided by the Saudi Emirates Insurance Co PSC 245 10.1 7.4% 7.4% 8.8% 6.72
Government for the companies operating Ras Al Khaimah Ceramics PSC 770 10.15 8.5% 8.6% 8.7% 3.53
in the cement and petrochemical sector. Dubai Insurance Co PSC 68 6.7 11.1% 10.0% 8.5% 2.25

The subsidies availed by the companies Al Ain Ahlia Insurance Co PSC 243 21.6 3.3% 5.8% 8.3% 60

are in the form of access to cheaper raw Dubai National Insurance 75 6.9 8.2% 8.3% 7.5% 2.45
materials and fuel. and Reinsurance Co PSC

The Saudi cement sector is vulnerable National Bank of 2,829 6.6 9.0% 8.0% 7.4% 5.52
since it is exposed to construction activity Ras Al Khaimah PSC
in the kingdom, which has been falling National Cement Co PSC
337 12.1 7.9% 7.2% 7.2% 3.5 Source: Reuters, Marmore Research – Sorted based on Avg Dividend Yield

with lower state spending. However, Air Arabia PJSC 1,714 12.2 6.7% 6.6% 7.2% 1.350
since the industry is less burdened by
debt (aggregate D/E ratio is 0.18x for KSA Emirates Integrated Tele- 6,295 14.6 6.9% 8.4% 6.9% 6.08
Cement Index constituents) than others, communications Co PJSC (du)
it should be able to maintain dividends
despite shrinking margins. Closing price is as on March 14, 2016. Cut-off date of Mcap 2015 is 31st Dec, 2015
The KSA and UAE listed companies
were mostly sitting on high cash balances, Top Dividend Yield Companies - KSA
with underleveraged balance sheets, that
helped them have high dividend payout MCAP PE Ratio Dividend Dividend Avg Closing
ratios. For instance, the average payout
Company 2015 (Current) Yield Yld Dividend Price
Saudi Cement Co SJSC
(USD Mn) (Current) (2015) Yld (2011-15) (SAR)

2,685 10.6 7.3% 9.2% 7.8% 63

ratio of top dividend paying stocks of KSA Qassim Cement Co SJSC 1,701 9.9 7.1% 8.9% 7.6% 64.5

and USE was 85% and 74% respectively Advanced 1,669 9.3 7.2% 8.0% 7.2% 39.2
between 2011 and 2015. However, Petrochemical Co SJSC

cheap oil is now threatening the pattern Saudi Chemical Co SJSC 973 12.1 8.6% 3.5% 7.1% 48.2

of corporate dividends in Saudi Arabia Saudi Arabia 9,309 12.6 5.6% 7.3% 6.8% 69.5
and UAE as companies find it harder to Fertilizers Co SJSC

raise funds affecting the health of the Yanbu Cement Co SJSC 1,850 9.4 7.6% 11.5% 6.8% 48
balance sheet of companies which have Yamama Cement Co SJSC 1,722 8.8 7.4% 9.5% 6.6% 28.2
maintained high payout ratios and may Arabian Cement Co SJSC 1,283 7.5 9.2% 9.5% 6.5% 45
find it challenging to sustain the high
payout ratios in the coming years. Al Abdullatif Industrial
The austerity measures in the form of Investment Co SJSC 658 10.4 6.1% 5.2% 6.4% 17.9 39

higher fuel, electricity, natural gas and Eastern Province 736 9.0 6.6% 7.9% 6.3% 34.5
feedstock prices will raise the costs of Cement Co SJSC

doing business for companies especially Closing price is as on March 14, 2016. Cut-off date of Mcap 2015 is 31st Dec, 2015

April 2016 | www.wealth-monitor.com

TAKING STOCK | Momentum Investing

Befriending
the Trend

Trend-following investing may not necessarily
work for every investor at all times, as there’s
always the risk of timing a buy or sell incorrectly.
By Fareem Chagla and Joachim Klement
“An object in a state of uniform motion
tends to remain in that state of motion
unless an external force is applied to it”
M40
omentum Investing is best explained
by Newton’s First Law of Motion. With
a clear lean towards technical
analysis in the perennial tiff between

fundamental and technical analysis,

momentum investing echoes the mantra

of ‘Buy High, Sell Higher’. It reflects a

www.wealth-monitor.com | April 2016

TAKING STOCK | Momentum Investing

strategy by investors and traders aiming 2500 85

to capitalize on the continuance of an 2000 Volatility Recorded 75
existing trend in the price of an asset, with Over The Last 3 Decades 65
the underlining belief that ‘Winners will be
Winners and Losers will remain Losers’. A
momentum investor will generally take a
long position in an asset that has shown
an upwards trend in the past or short sell S&P 500 LEVELS1500 55
CBOE VOLATILITY INDEX
a security that has been in a downtrend Source: Investing.com45
hoping to ride the trend.
Acknowledging that the financial
1000 35

market in itself is a complex web making it
difficult to pick winners, sectors or stocks
(goes beyond just equities), momentum 500 25
investing advocates an investor would 15
rather do well adhering to a system which
could identify market leaders or laggards.
Ideally, it is essential to reliably identify the 05
same based on performance over the last Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
6-12 months. Stocks that have gone up the
S&P 500 levels CBOE Volatility Index

most are said to have positive momentum and other very short-term momentum stocks and real estate stocks that started a
and are believed to outperform in the near techniques tend to underperform the strong rally.
future while those with the worst returns overall market by a wide margin especially
have negative momentum and would be in less liquid assets where trading costs Recent research by Prof. Didier
expected to continue their slip. may be much higher than the profits Sornette from the Swiss Federal Institute
that can be expected from a short-term of Technology, however, might provide
As economic cycles shorten and momentum investment. Generally, the some remedy against these momentum
volatility increases, it becomes imperative best time-frame to profit from momentum crashes. His research indicates that
to analyze this method of investing in the effects are investments that are based on momentum investors are better off
‘new normal’. Commentators advocating the performance of an asset during the combining momentum with acceleration.
this way of investing underline it as being last six to twelve months and held for one Acceleration measures the change in
one of the most flexible and dynamic to three months. momentum over two subsequent time
investing strategies – for this class of an periods. An investment has positive
investor, asset type does not take center Another risk of momentum investing acceleration if momentum is stronger in
stage; instead, what one focuses on is are so-called momentum crashes. Trend the second period than in the first and

negative acceleration if momentum is
weaker in the second period than in the
The flexibility of momentum strategies can first. Investors want to look for assets that
show positive momentum and positive
lead to excessive trading costs if momentum acceleration, i.e. situation where the price

signals are designed to switch quickly from is moving higher and the returns get
bigger and bigger over time. At the same
one asset to another time investors want to avoid assets with

performance. Thus, in times like these, following investment strategies tend to negative acceleration where momentum is 41
a momentum investors takes refuge in work most of the time – until they don’t. getting weaker over time. It is these assets
the fact that they can willfully switch Financial markets sometimes change that seem most vulnerable to crashes.
asset classes, stocks, commodities, direction very quickly. Take for instance
currencies, bonds, REITs or anything else the crash in October 1987 when US stock So Newton’s first law of motion holds
that has been hogging the limelight markets fell by more than 20% in one true for financial markets as well, but
over the last few months. In the current day without any real warnings. Similarly, investors should be aware that, just like
scenario, that could mean him investing stock markets started to recover very in physics, there is always a chance that
in gold and expecting it to continue its quickly at the end of the financial crisis in the impact of other forces may lead to
outperformance in the coming months. March 2009. Most traditional momentum a change in direction. Investors who are
strategies lost all their outperformance trying to exploit momentum effects have
Momentum investing, however, from the previous ten years in the two to be on the lookout for techniques that
does not come for free. The flexibility months from March to May 2009 because mitigate the negative effects of sudden
of momentum strategies can lead to the defensive stocks that had held up changes in direction. With the techniques
excessive trading costs if momentum reasonably well during the financial crisis explained here this might just be possible.
signals are designed to switch quickly suddenly were outshined by the bank
from one asset to another. Day trading *Joachim Klement is a trustee of the CFA Institute
Research Foundation

April 2016 | www.wealth-monitor.com

BLUE CHIP | Islamic Home Finance

Scaling Up

Islamic mortgage has emerged as a stronghold within the overall
Islamic finance sector and is well equipped to act as a catalyst in
the race of ‘Profit against Interest’, finds out Fareem Chagla

An Islamic home financing in essence options. Bashar Al Natoor, Global Head While the Islamic Finance domain is
involves the bank buying a property of Islamic Finance, Fitch Ratings, opines often criticized on the ground of a lack
on behalf of the customer and re- that the basic differentiator of products of standardisation, Natoor believes this
selling the same to them at a profit. It is particular segment, i.e. home financing, is
between Islamic and conventional
interesting to see the reasons behind the Finance, is their Sharia compliance not categorized as very sophisticated bank
popularity of this segment within the field nature and requirements, which has offering and thus does not necessarily
of Islamic Finance. The advent of freehold seen increasing customer demand in require reinventing, mainly due to its
property bought to the fore by markets assets backed and based nature.
in the GCC region has been instrumental Typical contracts centric to Islamic Home
in driving demand in the region. Coupled Finance include: Current contracts like ijara or
diminishing musharakah, amongst others
is the inherent nature of the mortgage fits well for such product offerings. On
contract, having an underlying tangible Murabaha, where the bank acquires the the same, Jayesh Soneji, CFA, Member of
asset; it becomes an ideal product offering property and sells it back to the buyer with CFA Society Emirates, believes the scope
in the bank’s portfolio allowing little scope a mark-up. of innovation limits itself to offering
of debate on religious grounds, which
has otherwise proven a grey area, given Ijarah, involving the bank typically flexibility to the customers. Some areas
varying interpretations. acquiring the property for the buyer he points towards are the possibility of
and then leasing it to them with the rent prepaying and settling the financing
For the consumer, one of the biggest income constitutes the repayment. without attracting huge break up cost
factors drawing attraction towards this as is currently the practice and also the
method of financing is the removal of
uncertainty around the financing process Diminishing Musharakah, involving the possibility to have variable profit rates
and having more transparency around buyer and the bank acquiring the property as part of the options for a customer.
the same. With the agreement clearly jointly. The buyer’s share represents the As an end user, the customer continues
outlining the profit amount upfront, it down payment. Subsequently, the bank to remain in the dilemma of opting for
is immensely beneficial for clients who leases its share of the property to the the Islamic Financing or Conventional
seek peace of mind. Besides, unlike buyer in return for a rental payment. Loan route for his home. Soneji adds that
while liquidity is drying out from the
conventional finance which invites heavy conventional banking ecosystem, there
penalties, translating into an ‘interest on the past few years. In countries with a has been an upsurge in people parking

interest’ in the event of a delay in paying mature Islamic finance sector, banks their savings and liquid cash in Islamic

an installment, Islamic Finance outlines have managed to some extent to reduce Banking channels, which in turn has
a fixed fee charged to the client, which is such cost, and now there are many seen increased liquidity chasing Sharia
then directed towards charitable activities. Islamic banks and institutions, and even Compliant Institutions.
However, this does come at a cost. conventional banks, Islamic finance In summary, the Islamic Home

Some critics have in general underlined windows, having similar offering, making Financing has within a short period of time
the higher costs associated with the overall quality of servicing a key established itself as a strong competitor
42 Islamic Financing, given the increased competitive factor. within the mind of the potential home

documentation requirements, which could Popular Islamic home financing options buyer and is well equipped to act as a
lead to higher structuring cost compared in the UAE are typically based on the ijarah strong pillar in the race of ‘Profit against
to available traditional conventional contract and diminishing musharaka. Interest’.

www.wealth-monitor.com | April 2016

Under the patronage of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi
and Deputy Supreme Commander of the UAE Armed Forces

I WANT TO
EXPAND MY
INVESTMENT
PORTFOLIO

THE HOME OF
REAL ESTATE INVESTMENT

Cityscape Abu Dhabi, the capital’s largest and most 12 -14 APRIL 2016
influential property exhibition is back. Bringing together
investors, developers, government officials and real estate Abu Dhabi National Exhibition Centre, UAE
professionals, there is no better place to find investment
opportunities and new business partners. With hundreds
of developments from Abu Dhabi and overseas being
showcased, Cityscape Abu Dhabi 2016 is the home of
real estate investment.

Register now for FREE entry

 +9714 336 5161  [email protected]  www.cityscapeabudhabi.com

Strategic Platinum Gold Sponsor Silver Sponsor Official English Official Arabic Supporting Official Online Regional
Partner Sponsor Newspaper Newspaper Partner Partner Broadcasting

Partner

Research Partner Official Property Official Classified Business Magazine Official Magazine Official Russian Hosted Organised By
Portal Partner Publication Alongside exhibitions

April 2016 | www.wealth-monitor.com

Register
to

Visit!

Book
your
Stand!

The Place for Best Local and International Property Deals

Local & International Close Deals Focused HNWI from
Properties at the Show Consumer Show across the world

PARTNERS AND SPONSORS :

Strategic Partner Platinum Partner Silver Sponsor Bronze Sponsor

Official Indian TV Partner Official Online Property Portal

Official Regional Broadcasting Partner Official Chinese Media Partner Official Australian Media Partner Official Italian Property Portal Official Asian Property Portal Official Magazine Partner

Contact: Organised By

+971 4 39 23232 wwww.wwewal.tihn-tmeronnaittoior.ncoamlpr|oApperirlt2y0s1h6ow.ae
[email protected]

MARKETS REWIND | History of Property Bubbles

Living in a

Bubble
Property as an asset class has seen some of the greatest bubbles in
history when values crashed through the floor. Here is a glimpse

Investopedia defines a housing bubble would be in the know of the bubble prices and credit leading to another
as ‘a run-up in housing prices fueled by which rose in the late 1980’s coming to misalignment of property prices and
demand, speculation and the belief that the fore in the early 1990’s. The same eventual burst that causes large losses in
recent history is an infallible forecast of the traces itself back to a province, Hainan the banking sector. This is a stark reminder
future’. At some point demand decreases Island, emerging as the epicenter to the of the period between 1997-2007 which
or stagnates amidst abundant supply, bubble burst. Estimates peg the housing saw the economy witness a massive house
resulting in the bubble bursting. While prices in the region having moved from price boom, recognized amongst the
the asset class, given its inherent nature Yuan 300 a square meter in 1989 to Yuan longest and biggest in Europe. The boom
of larger sized transaction and carrying 7,500 in 1992. The irrational buoyancy was fueled by strong economic growth, a
costs, is less prone to witnessing bubbles, crept to other part of the economy which low interest rate regime and loose credit
the scale and aftermath of the incidents compelled People’s Bank of China initiate conditions. This bubble burst in 2008.
occurred have left indelible marks on the a tight monetary policy, raising interest
financial course of the world. What more rates and controlling credit growth. The In a recently released report, UBS Global
of evidence to this than the US Housing bubble burst. Real Estate Bubble Index, notes that
market collapse in 2007-2008, plunging quantitative easing across the world has
the world into an economic crisis from
which it is still recovering. UBS Global Real Estate Bubble Index

While real estate bubbles over the last Latest index scores for the housing markets of selected world cities
century can be traced back to as early as
a precedence to the Great Depression in –1.5 –0.5 0.5 1.5
1929, recent history has been replete with
a number of cases. London

Japan: The Bank of Japan had lowered Hong Kong
interest rates from 5% in 1985 to 2.5%
by early 1987. This meant Japanese Sydney
banks were flush with cheap liquidity,
which found its way to the real estate Vancouver
segment. The Japan Real Estate Institute
(2004) recorded 6 major cities having San Francisco
experienced a commercial land price
increase to the tune of 302.9% in 1991 Amsterdam
compared to 1985, while residential land
and industrial land price jumped 180.5% Geneva
and 162.0%, respectively. The vicious cycle
led to an eventual bust leading to what Zurich
has come to be known as Japan’s ‘lost
decade’. Paris

China: China has had its share of asset Frankfurt SSoouurrcceess::UUBBSS
price surges, including real estate, most
recent of which has been documented Tokyo
in the period 2005-2011. However, few
Singapore

New York bubble risk (>1.5) undervalued (–1.5 to –0.5)
Boston overvalued (0.5 to 1.5) depressed (<–1.5)
Chicago fair-valued (–0.5 to 0.5)

Ireland: In a recently released report, seen central banks more than triple the 45
OECD Economic Surveys Ireland warns global monetary base since 2008, leading
Irish property prices have strongly risen to lowered real interest rates. Inexpensive
since their trough in early 2013. Such financing combined with bullish
strong price rises may again spark a expectations has led to real estate prices
reinforcing spiral of higher property decoupling from the real economy.

April 2016 | www.wealth-monitor.com

WHAT’S HOT

The New Case For Risk Assets

After experiencing torrid market conditions during the first couple
months of the year, investors eventually moved back into equities
and commodities. Will the bullish momentum continue?

Brent crude has Investors returned to risk assets last below the January lows occurs remains to
advanced as month following the February sell-off. be seen. However, there is some reason
much as 57% While the US dollar weakened, globally for optimism. The rallies off the lows
and WTI was up developed and emerging equity markets have exceeded the two prior rallies that
60.8% from the strengthened, including Brazil, one of have occurred since the June 2014 peaks
bottom the hardest hit markets, along with oil, on a percentage basis. Brent crude has
as well as copper. In the short-term, we advanced as much as 57% and WTI was
46 can expect some weakening, followed by up 60.8% from the bottom. This reflects
further strength. underlying strength in the rally, and
Commodities come back therefore increases the chance for further
A weaker dollar looks to have helped bullish sentiment.
commodities last month as the Interest in high-yield soars
Commodity Research Bureau Index was Following the sell-off of risky assets that
able to reach a three-month high of ended in February, interest in one of
$178.68. Further, the rally exceeded the the hardest hit assets, high-yield debt,
two prior rallies from the past 22 months has seen the early stages of at least a
on a percentage basis. Together, this temporary recovery. Since hitting a peak
points to an improving outlook for overall of $95.43 in June 2014 the iShares High
commodities over the coming months. Yield Corporate Bond ETF (HYG), the most
The index had been in a relatively steady active US listed high yield ETF, has been
decline since its most recent peak in June in a relatively steady decline until two
of 2014, with it falling as much as 50.6% as months ago when it found support at
of the February low. Weakness at this point $75.09. It has since advanced as much as
is likely to be met with more aggressive 10.0% as of last month’s high of $82.61.
buying, thereby holding and further lifting That’s the biggest rally seen since the June
prices. 2014 peak and put HYG at a three-month
Oil improves high. Given that there’s only been one leg
Oil had its strongest performance in a up so far, the chance for further strength
year in March, with both Brent and WTI following a pullback is good. However,
crude ending at a three-month high. the long-term trend remains down. Given
Each started to run out of steam by the the trend towards slower global growth
end of the month and could see further and its impact on corporate profits, an
retracements from the highs before eventual rise in interest rates, and risk in
proceeding to advance the uptrends the bond market from energy issuers, the
that began off the January bottoms. long-term bearish trend will likely again
Whether the March highs (WTI $41.85, become dominant. For now, watch for
Brent $42.52) are exceeded before a break short-term weakness, followed by further
strength.

By Bruce Powers, CMT, Chief Market Analyst at MarketsToday.net, and President at WideVision

www.wealth-monitor.com | April 2016

WHAT’S NOT

Dollar’s Pain
The US dollar tumbled after the Fed’s dovish stance,
and is likely to remain under pressure in the near future

Downside pressure remains on dollar until after the referendum in June on Downside 47
The US dollar index continued to weaken whether the UK remains in the EU. High pressure in the
last month, falling to a five-month low at prices, currency volatility, and the impact dollar will likely
$94.58, which was 5.9% off the $100.51 from low oil prices are attributed to the remain for the
early-December peak. That low followed softening.
the US Fed’s announcement that they Pensions liabilities leading to disaster immediate
were lowering expectations for rate Estimates for the amount of unfunded future, benefiting
hikes this year by 50%. Although the US or underfunded government pension
currency recovered some leading into the liabilities within twenty OECD countries commodities,
end of the month, it remains in a down total $78 trillion, according to a recent and equities
trending channel within a larger one-year Citibank report titled, “The Coming
trading range. If the March low is breached Pensions Crisis, as reported by CNBC. This
to the downside we can anticipate a is government debt that is not included in
move down to the 93.80 area, if not a public debt-to-GDP ratios, noted Business
little higher. At that point the chance for a Insider. The amount of outstanding
more significant recovery increases. This is government debt of those countries
assuming the dollar doesn’t fall decisively triples when including unfunded liabilities,
below that price level. Regardless, added The Wall Street Journal. For years
downside pressure in the dollar will governments have been postponing
likely remain for the immediate future, pension contributions to meet current
benefiting commodities, and equities. liabilities, or siphoning off existing funds
Keep eye out for confirmation of for “emergencies,” all the while putting
weakness in high-end property workers promised retirement benefits at
Global real estate has boomed in recent great risk.
years with London and New York key
markets for international investors, each What’s happened in the city of Chicago,
reaching record high prices. Market prices Illinois, the third largest city in the US, is
move in cycles and there is growing an early symptom of a global problem.
concern that we have reached or are Unfunded liabilities to Chicago’s employee
close to a top. When real estate prices retirement accounts is $20 billion, and
turn it’s usually seen first in the high-end. there’s not enough money to cover it. This
As reported in Business Insider, the US is putting pressure on city services, and
Federal reserve noted last month that the has led to a significant rise in property
high-end property market in New York taxes, thereby pushing some residents
City is looking “particularly sluggish.” For out of the city. Chicago saw the greatest
London, as reported in the Financial Times, population decrease of any major US city
major international property investors in 2015, reported the Chicago Tribune. On
are delaying purchases of UK real estate top of all that, the state of Illinois is $111
billion short on its pension liabilities.

By Bruce Powers, CMT, Chief Market Analyst at MarketsToday.net, and President at WideVision

April 2016 | www.wealth-monitor.com

TECHNOLOGY TRENDZ | Quants
Quantitative analysts, or quants, apply a blend of
mathematics, finance and computer skills in securities
trading. But are they always right?

48

www.wealth-monitor.com | April 2016