UAE- Global Financial Markets Forum 2016 opens

ABU DHABI 2nd March 2016 (WAM) - Sheikh Nahyan bin Mubarak Al Nahyan Minister of Culture and Knowledge Development discussed the increasing importance of knowledge to the future of the UAE as the country seeks to become a major regional hub in the global economy.

"Our cultures whatever their distinctive characteristics must create produce transfer adapt and localise knowledge if they are to flourish" he said in a keynote speech delivered during the opening session of the Global Financial Markets Forum 2016 in Abu Dhabi today.

Creating a knowledge-based economy and society were the primary goals of the UAE's late founder Sheikh Zayed bin Sultan Al Nahyan and remain the fundamental goals of the country's present leadership he said.

Wisdom will be the moral compass that will guide the country in its quest to improve the health and safety of its communities deal effectively with critical environmental issues such as climate change waste management recycling potable water and renewable energy he argued.

In an interconnected world it is vital that individuals and institutions work together and embrace knowledge to achieve success. He lauded Abu Dhabi's institutions and economic plan 2030 that seeks to achieve a socially cohesive and economically sustainable community with knowledge at its core.

The Forum kicked off with a welcome note from Nasser Ahmed AlSowaidi Chairman of NBAD and Etihad Rail. AlSowaidi emphasised the UAE's position as a vital finance trade and logistics hub in a changing geopolitical and economic environment. The country continues to "act as a bridge between some of the fastest growing and most exciting markets from the West of Africa through the Middle East to the farthest reaches in Asia" he said.

The UAE's long-term investment strategy financial depth and economic diversity are key to navigating through the current period of low oil prices. While the UAE wasn't immune to fluctuations in oil prices it was no longer "enslaved" to them he added.

Al Sowaidi concluded his speech by stressing the crucial role financial institutions play in today's changing economic environment. Banks such as NBAD ought to continue advancing the UAE's position in international capital markets preserve liquidity in the domestic market and extend their support to local businesses and people.

Ahmed Al Sayegh Chairman of Abu Dhabi Global Market (ADGM) took to the stage to recount the latest developments and milestones at the emirate's new financial centre and its future plans.

After becoming fully operational in October 2015 the ADGM attracted local and international institutions aiming to set up a regional hub from the UAE's capital. ADGM underscores the government's efforts to attract local and international financial institutions to the UAE's robust financial services sector and home to some of the world's largest sovereign wealth funds.

According to Al Sayegh ADGM's activities reflect its strategy of cooperation with global funds and trust houses to support Abu Dhabi's ambitions.

Global uncertainty and market volatility continue to be seen in 2016 with heightened risk aversion among investors that triggered global equity market declines since the beginning of the year he continued.

However an increasing focus on financial innovation and technology can be seen in markets such as the U.S. Europe and China. "Fin tech eco-systems have stimulated technological innovation improved efficiency of financial markets and systems and more importantly raised the standards of the overall customer experience" he said.

In a panel discussion moderated by CNN's Emerging Markets Editor John Defterios Khalifa Salem Al Mansoori Undersecretary of the Department of Economic Development in Abu Dhabi and Homaid Al Shemmari CEO of Aerospace and Engineering Services at Mubadala discussed the emirate's post-oil future. Both panelists emphasised the UAE's long-term view and its economic diversification plans.

Al Shemmari stressed that the UAE and Abu Dhabi have been saving for "these rainy days" referring to the slump in the price of oil.

"This oil price slug is not new to us. Since the 1970s our late founder of this country has saved the earnings of oil in the UAE to make sure we have funds and capital investments for the future" he said.

Since 2008 Abu Dhabi Vision 2030 has been driving investment in industrial sectors to diversify away from oil and petrochemicals he added. The country's dependence on oil has been declining as new industries such as aerospace and renewable energy expanded according to the CEO.

Al Mansoori for his part said that the Department of Economic Development was looking at the country's future 50 years from now seeking to translate its leaders' vision into concrete plans and perhaps re-visit its diversification model to create a sustainable economy beyond oil. "We are not in the panic mood of looking at oil as the primary driver of economic growth" he stressed. Sectors such as healthcare education infrastructure logistics industries and renewable energy will play an important role in Abu Dhabi's economy in the next 20 years he added.

Mubadala's Al Shemmari echoed his comments adding that the UAE's commitment to education "is second to none" in the region and is designed to build knowledge that will cater to the needs of the industries being created. Education research and development and a knowledge-based economy are the UAE's future he said.

In conclusion Al Mansoori said the country is not "sidetracked by oil prices or the geopolitical situation in the region" and has a robust strategy to deal with various future scenarios that may arise.

The following panel discussion looked at the main challenges facing the world's most important economies China and India. According the first panelist Xiaodong Tang CEO of China AMC - one of the leading asset management companies in the country - the world has paid "way too much attention to the devaluation of the Chinese local currency". There is no need to deny that the economy is slowing down and that people are concerned but there are also a lot of opportunities he said. "The local real estate market is coming back and the central bank relaxed the quota restrictions on foreign institutions investing in China" he said adding that there is still a large amount of industrial growth.

Alok Agarwal the Chief Financial Officer of Reliance Industries Ltd acknowledged that watching what happens in an emerging country like China was very important for Indian companies. "The change of the Chinese currency is going to change the competitiveness of Indian industries" he said.

As to the question of why India was still pushing for more manufacturing industry in spite of the global economic slowdown Ms Zia Mody the Founding and Managing Partner AZB Partners a prominent law firm in India reminded the audience of the demographics. The country is expecting more than 111 million people between the age of 15 and 29 by 2025 which is 40% more than what China is expecting she said. "We have to get them engaged".

Concerning China's "One belt one road" plan Professor Rana Mitter Deutsche Bank's Director of the University China Centre at the University of Oxford said that while China can build railways and ports very successfully it must not ignore security issues and try to find a balance between security and economy.

One question from the audience also raised the credibility issue of China's economic data after the government changed the way it calculates the GDP. Mr Mody said that as people suspect manipulation "they will find it harder to use these statistics".

In day one's last panel discussion analysing the performance of sovereign wealth funds (SWFs) Jean-Paul Villain Director Strategy Unit Managing Director's Office at the Abu Dhabi Investment Authority and Uche Orji Managing Director and CEO of the Nigeria Sovereign Investment Authority (NSIA) discussed the drop in oil price its cyclical nature and investment opportunities in today's financial climate.

On whether the slump in oil prices has reduced the value of SWFs' assets Orji said this was largely dependent on the fund's design. "Commodities by definition are cyclical and you should design for moments like this. People shouldn't be surprised by the current decline [and its impact] on businesses like this" he said. From the beginning the structure of the NSIA was based on a level of cautiousness anticipating such drops he added.

The bigger challenge and concern today was negative interest rates in three of the world's major markets a trend that could force people to be more careful Orji said. The U.S. Federal Reserve increased interest rates in December for the first time in almost a decade.

While acknowledging the world economy was in crisis Orji said it was nowhere near the scale of the financial downturn in 2008 with financial institutions being better regulated today leaving room for optimism. He recalled the bust that followed the dot com bubble and the subsequent recovery.

"The world always innovates. There's always consumption and demand that follows that innovation. If you think about it that way you will always find opportunity within that crisis" he explained.