Download 2015 Global Financial Markets Forum Concludes

2015 Global Financial Markets Forum Concludes
1500 delegates attend NBAD annual event
Abu Dhabi (March 2nd, 2015) - 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
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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
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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
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Chinese middle class makes it necessary to switch to a consumerbased 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
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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.
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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
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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.”
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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 http://www.gfmf-nbad.com
- End-
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