After Paris and Brussels, Gulf Development Company (GDC Partners) the Abu Dhabi based investment and advisory company conducted a roadshow in London. "When the UK voted for Brexit, we saw a window of opportunities for business initiatives to acquire cheaper assets and develop new ties with British companies" said H.E. Mubarak Bin Hamoodah, Chairman of GDC Partners.
During this seven-day roadshow, GDC Partners' team met with major public and private economic players in the UK. The delegation of 4 was led by Houssam Nasrawin, CEO of GDC Partners.
Mohammed Al Hunity, Vice-chairman of GDC Partners shares his optimistic view about the post-Brexit era where despite a significant uncertainty, he sees opportunities to seize for GCC business professionals. "Following the decision of the UK to quit the EU, the stock index FTSE 250, which is more representative of the UK economy than the FTSE 100, dropped dramatically and the British Pound hit a 31-year low against the dollar. The UK economy might heavily suffer from an exit from the single market. While many sectors could be impacted, all eyes will be on the banking industry. Since the 19th century, London is the largest financial hub in Europe and hosts today more than 500 international banks and almost 13,000 financial institutions. In 2013 the financial industry represented 12% of the GDP of the country. For decades, major international banks, mainly from the USA, such as Goldman Sachs, have used London as a gateway to other European countries without having to get a specific regulatory approval in each country. With the Brexit vote, American as well as Japanese and Swiss banks are looking into the possibility of moving some of their European businesses out of London which would represent an enormous loss for the UK".
Al Hunity added that the depreciation of the British currency could have a limited positive effect on the deficit as UK consumers may continue purchasing imported goods even though they get more expensive while despite cheaper service exports, the demand for British expertise in global markets remains slow. All these factors combined may lead to a recession in the UK economy aggravated by a higher inflation and a slow growth of the British purchasing power.
"The main threat for GCC economies is for sure the volatility and the short term slowdown of the market. The Brexit will have negative effects on sectors that have strong exposure to the UK as well as to the European market, for example petrochemical, trading, banking and also tourism".
However, "the effects on the GCC and mainly on the UAE economies will be limited". He added "Only few days after Britain has voted not to stay in Europe, GDC Partners decided to conduct a roadshow in London in order to meet the business makers to start working on the opportunities that this new challenging era offers". He said "There are reasons to be optimistic".
First of all, there is a currency positive effect: the Sterling is presently trading at around $1.29. The British pound has fallen to its lowest level against the dollar since 1985 after the Brexit vote and "we forecast that it will continue to weaken" analyses Al Hunity. "UK economy is full of innovative companies with high potential, in services but not only. UAE and GCC economies are pegged to the dollar. In the medium term, once there will be more clarity and the currency volatility reduce, it will allow GCC investors to acquire assets in the UK for a good price".
Secondly, there is a market opportunity: "there are above 250,000 expat Brits presently living in the UAE, mainly in Dubai and Abu Dhabi. There are strong historical ties between the UK and the UAE as well as other GCC countries. After Brexit, it will be more and more difficult for British companies to do business inside the single European market and they will have to look for other options outside Europe. The GCC and the UAE are the ideal markets for them to develop their business and find new sources of growth". The Vice-chairman added: "GDC Partners wants to assist those British companies to establish and succeed in the Gulf market. In the coming weeks, we will continue to visit them, talk to them and explain them why they should relocate a part of their activities in the region".
During the roadshow, GDC Partners identified investment and partnership opportunities. Also an event gathering business professionals from the GCC and the UK is planned in London by the end of 2016.
For more information, please visit: www.gdc-partners.com or contact us: info@gdc-partners.com
© Press Release 2016
