1500 delegates attend NBAD annual event
Abu Dhabi - The seventh Global Financial Markets Forum (GFMF), the annual conference organised by the National Bank of Abu Dhabi (NBAD), concluded today in Abu Dhabi.
Prominent speakers from UAE and global decision makers, thought leaders, investors, and financiers participated in the 2015 GFMF which attracted nearly 1500 delegates over two days.
The first panel discussed the world's challenges from Sovereign Wealth Funds' (SWF) perspectives. The main questions panelists focused on was how to generate returns in spite of low interest rates, sliding oil prices and a strong dollar.
Panelists agreed that the environment will be very difficult this year. However, SWFs are designed for the long term and that they can stomach the liquidity squeeze.
Panelists also addressed the question of opportunities in Europe with distressed portfolios in European banks coming to the markets. They agreed that SWFs will be beneficial of the assets that the banks will offload.
They also discussed the impact of oil prices on investments and low interest rates. "The low interest rate environment will force us to put more money in equity markets and this year we are allocating more on emerging markets," said Uche Orji, MD and CEO of the Nigerian Sovereign Investment Authority.
Concerning China all panelists expressed positive views on the country for the long term.
Regulators' Views
H.E. Mubarak Al Mansoori, Governor of the Central Bank of UAE; H.E. Hamood Sangour Al Zadjali, Executive President of Central Bank of Oman; and Sir Paul Tucker, Former Deputy Governor of the Bank of England participated in the second discussion panel on regulators' views on market opportunities and risks.
Panelists agree that the strong dollar is helping oil exporting countries' economies since they are selling in dollar and that it compensates for the sliding oil prices with a higher purchasing power. Investments are mainly denominated in dollar. The peg to the dollar was also seen as a positive factor from the UAE side.
The world economy is expected to grow by about 3.5% this year which was seen as positive but pointed that the growth scene has changed and become more country specific.
Panelists welcomed the US economy's recovery and China's good long-term planning.
Panelists also debated on whether it is better to favor rapid growth with the risk of generating bubbles or stability. Regulators said that after the global financial crisis, they started to be more strict in implementing regulations. Panelists said central banks can provide a platform for stability but that it was not in their power to provide growth.
They also agreed that cyber-crime is one of the big risks to beware of today.
Financing trends in a challenging environment
On the issue of Europe's ability to attract investments, H.E. Pierre Gramegna, Luxembourg's Minister of Finance said he was optimistic for many reasons; Europe has done its homework and now has a common umbrella and common supervision of banks, the new European Commission has announced a €350bn investment plan for the coming years; falling oil prices boost consumption; and the quantitative easing programme is starting today. Europe needs to rebuild confidence and predictability.
M. Gramegna also announced that his country will be more active in Islamic finance after already launching a sovereign sukuk: "We need to learn from Islamic finance because it is based on collateral.
As for the current challenges for the Chinese market, Huang Hong - Deputy CEO, Bank of China (Hong Kong) recognised that the model that has worked so far based on an investment and export driven economy is no longer sustainable because of different factors including overcapacity in some sectors, growing labor costs and environmental issues. The existence today of a Chinese middle class makes it necessary to switch to a consumer-based economy. China is counting on its long-term planning that involves also building new strategic infrastructure like roads and ports. Mr. Hong said that his country also needs to develop its financial sector including IPOs, venture capital, private equities but that achieving financial stability is hard work as for any country in the world. He also tried to reassure the audience on China's public debt saying that the country can sell many of their numerous State-owned companies as well as land to cover it.
Dr. Kyttack Hong, the Chairman and CEO of the Korea Development Bank, whose country has gone through different financial crisis over the last decades insisted on the highly educated Korean population and their investment in Research and Development. Korea's aging population stresses the need to utilise the country's female force more. Creative economy is also another possible source of growth he said.
Concerning challenges that banks are facing in today's environment, Didier Valet, the Head of Global Banking & Investor Solutions at Societe Generale said that banks need to better connect finance from investors and corporates and be more client oriented. He believes in the universal banking model. "Investors should look at Europe as a land of opportunities for the next 18 months" he said.
As for the issue of Greece within the European Union, Mr. Gramegna said that "Both parties have achieved a compromise and bought themselves 4 months, but Greece's exit is not on the agenda".
Aerial view of capital movements
In the session titled, "Financing from 30,000 feet - An aerial view of capital movements", Marc Allen, President, Boeing International, spoke to Vasgen Edwards, Managing Director and Head of Aviation & Transport, NBAD, about aerospace financing and was very optimistic about growth in 2015.
Referring to a plane as movable real estate, Marc Allen, elaborated on the financing and growth opportunities that exist in this sector. "In the UAE, 2015 is the year of innovation and we completely relate to that. Innovation drives efficiency, which in turn drives economic growth. We, at Boeing, strive to be innovative and thus promote economic growth. We believe that the Gulf region is the central connector between the West-East Corridor."
According to Marc Allen, it is a unique industry and one cannot succeed without extensive product knowledge, which is key. The asset strength of a plane is unique and it is imperative to know all the aspects of this asset. Highlighting the business opportunities in the region, Marc Allen said that 30% of the wide-bodies backlog orders reside with the Gulf carriers.
With funding needs for aircraft deliveries forecasted to grow to $125 billion in 2015, and then climb to $129 billion in 2016, real opportunity for investors to put themselves in a good spot when it comes to aviation finance.
El-Erian: Adapt to new paradigms
Dr Mohamed El-Erian, the Chief Economic Adviser at Allianz and former CEO and co-CIO at Pimco shared his views on current economic challenges. One of his worries for 2015 was deflation in Europe. While he welcomed the European Central Bank's quantitative easing as a short term solution, he said that for the long term it was more about changing our minds and adapting to new paradigms.
The economist also analyzed the economic situation of various countries. The US economy is healing faster than people thought including US companies, banks and people as new jobs are coming in. "The US will build momentum" he said but insisted on the need to get out of the zero interest rate." But doing it without creating a market accident is challenging, he recognised. "Central banks have moved from being doctors to being brain surgeons. And their hands are trembling" Mr El Erian said. The USA are also the only country that have let their currency appreciate, because the economy is growing. "Everybody else is committed in weakening currencies, he said. "This has brought back volatility of currencies and the other side is an increasing volatility in the financial market".
Concerning Asian countries, his main worry, in spite of the region's growth is that they are now moving in a world where Western Central Banks have become unpredictable. "Switzerland, Danemark and Singapore are three examples where Central banks have recently taken unpredictable actions that have disrupted the market."
Concerning Egypt, Mr El Erian was bullish about the government's plans and first signs of economic recovery including growth of GDP, investments and in the tourism sector. "We can see a framework that really targets higher growth, a government that understands the need to help its private sector and a program with social objectives including education and health," he said. "It is the first time that I have seen these three components together. But the question is : can the government implement it?"
Mr. el Erian also examined the challenges in the oil sector. The appearance of shale and the mobility brought by the internet represent fundamental changes. "As it mostly happens when they see an innovation, people have overreacted. They have overcommitted to shale", Mr El Erian said. "They thought that OPEC would be willing to lose market share but it was not."
According to the economist the good news is for the consumers because they enjoy immediate tax cuts. The bad news is that there are major adjustments going on in the world. "But the ugly news is Russia, an economy that is imploding in front of us," he added.
For further info on GFMF, please visit www.gfmf-nbad.com
About NBAD
The National Bank of Abu Dhabi (NBAD), the leading bank in the Middle East and one of the 50 safest banks in the world, has one of the largest networks in the UAE as well as branches and offices in 18 countries stretching across five continents from the Far East to the Americas.
A comprehensive financial institution, NBAD offers a wide range of banking services and products to all segments of clients. NBAD grows strategically toward its vision to be recognised as the World's Best Arab Bank.
Since 2009, NBAD has been ranked one of the World's 50 Safest Banks by Global Finance magazine, which also ranked NBAD the Safest Bank in the Emerging Markets and Middle East.
NBAD is rated senior long term/short term AA-/A-1+ by Standard & Poor's (S&P), Aa3/P1 by Moody's, AA-/F1+ by Fitch, A+ by Rating and Investment Information Inc (R&I) Japan, and AAA by RAM (Malaysia) , giving it one of the strongest combined rating of any global financial institution.
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© Press Release 2015
