Investing in the UAE

CH 10

Investing in the UAE

IntroductionWhy Investing in Global Markets?

1. Additional investment opportunities

2. Growth potential

3. Diversification benefits

4. Expand efficient range

World Stock Market CapitalizationYear 2015

• United States

43%

27%

11%

9%6%4%

• Other Europe• Japan• United Kingdom

• Other Pacific• Canada

International:

Top Markets in the World

Why Investing in Global Markets?

• Investment Opportunities:Two categories of Investment 1- Human Capital Investments2-Money Investments

Why Investing in Global Markets?

1- Human Capital Investments: is the combination of competencies (knowledge, skills, social and personality attributes, including creativity and innovation embodied in the ability to perform labor so as to produce economic value.It can be developed through education, research, training and career planning

Why Investing in Global Markets?

• Money Investments- Short-term Investments: Buying common

stocks, Certificate Of Deposit , Treasury bills, short-term bonds, commercial papers ( see money markets for more options)

- Long-term investments: Real Estate, annuities, mutual funds, long-term bonds, life insurance ( see capital markets for more options)

Why Investing in Global Markets?

• Investment Opportunities in global Markets• Three categories:1- Developed Markets2- Emerging Markets3- Second Emerging Markets

Why Investing in Global Markets?

• Developed Markets: or developed economies are those countries that are thought to be the most developed on the basis of their economic size, wealth, quality of markets, depth of markets, breadth of markets.

Why Investing in Global Markets?

Source: Morgan Stanley Capital International (MSCI) as of NOV, 2013

• Australia• Austria• Belgium• Canada• Cyprus• Denmark• Finland• France• Germany

• Greece• Hong Kong• Iceland• Ireland• Israel• Italy• Japan• Luxembourg• Netherlands

• New Zealand• Norway• Portugal• Singapore• Spain• Sweden• Switzerland• United Kingdom• United States

Developed Markets

Why Investing in Global Markets?

• Emerging Markets: is a nation with social or business activity in the process of rapid growth and industrialization

The term emerging markets, is used to describe investing into the markets of developing economies of the second and third world. The idea being, an investment in the industry of a country such as Russia today, will yield great returns for that investment tomorrow.

Emerging Markets

Argentina

Brazil

Bulgaria

Chile

China

Estonia

Hungary

India

Indonesia

Latvia

Lithuania

Malaysia

Mexico

Pakistan

Peru

Philippines

Poland

Romania

Russia

South Africa

Thailand

Turkey

Ukraine

Venezuela

1 As of July 16, 2012, the International Monetary Fund (IMF) labels the following countries as "emerging economies

Why Investing in Global Markets?

• Second Emerging Markets: include some low income, lower middle, upper middle and high income GNI countries with reasonable market infrastructures and significant size and some upper middle income GNI countries with lesser developed market infrastructures. The secondary emerging markets are:

Why Investing in Global Markets?

• Chile• China• Colombia• Egypt• India• Indonesia

• Morocco• Pakistan• Peru• Philippines• Russia• UAE

Source: Morgan Stanley Capital International (MSCI) as of June, 2013

Investment Opportunities in the UAE

Developed countries all have met criteria under the following categories: • High Income Economies• Market and Regulatory Environment • Custody and Settlement

– Settlement - Rare incidence of failed trades– Custody-Sufficient competition to ensure high quality custodian services

• Dealing Landscape – Brokerage - Sufficient competition to ensure high quality broker services– Liquidity - Sufficient broad market liquidity to support sizeable global

investment– Transaction costs - implicit and explicit costs to be reasonable and

competitive– Transparency - market depth information / visibility and timely trade

reporting process