Eastern push keeps Dubai’s financial centre growth on target

Added 20th May 2016

The Dubai International Finance Centre (DIFC) is on course to match its record breaking results of 2015 this year despite the impact of lower oil prices on activity across the Gulf region, according to its chief business development officer, Salmaan Jaffrey.

Eastern push keeps Dubai’s financial centre growth on target

Last year the DIFC saw record growth in terms of the number of companies registered within its jurisdiction, the number of employees and total area leased.

“This year we’re on track to at least repeat, if not exceed last year,” Jafffrey said in a recent exclusive interview with International Adviser.

“Our clientele is literally all around the world, and so any headwinds generally are not shared equally,” he said.

Eastern growth

Jaffrey said the growth was coming from a number of different directions including a rise in the number of firms registered to do banking, capital markets, insurance and asset management business. While in terms of regional sources, he identified a pickup in activity from China and India.

“So in terms of growth, banking, capital markets, insurance, those are the verticals, and the markets where the growth’s coming from are China and India,” he said.

Jaffrey estimated that around 27% to 29% of the banking business, mainly lending and trade finance, done out of the DIFC is booked by Chinese banks, and a slightly lower 25-27% is booked by Indian banks in the centre.

Chinese expansion

Currently the top four Chinese state banks operate from the DIFC, and Jaffrey said a fifth bank was expected to be established shortly.

“What the Chinese banks did was make a conscious decision to support their state enterprises and their corporates into this region (the Middle East and Africa) and they picked the DIFC as the hub and launching pad for that,” he said.

The type of business coming from China was also changing, he added.

“We’re seeing the tier two banks, and that’s not a value judgement, that’s just a size label, are also now looking for markets outside of China.  So we’re seeing interest from them.

“Number two, we’re seeing the same pattern for insurance companies following, so wherever you have finance, you almost by default need insurance.

“And the third piece, which is really interesting also is, and this is literally a few months old, the securities companies themselves are now starting to look at the region. We have had enquiries from Chinese securities firms looking for Middle Eastern capital for Chinese infrastructure projects and other such projects,” he said.

Rivalry boost

Asked about the growth of rival financial centres in the region which now includes Abu Dhabi, Qatar and more recently the possibility of Riyadh in Saudi Arabia, Jaffrey said that given the growth in the region, “we are of the belief that rising tide helps everybody”.

“The one thing that has been leveled against this region for years has been scale, that we don’t have enough scale when it comes to capital flows, population and clients. Financial centres are designed to generate business, which is good for scale so, big picture, I think we welcome any activity that does that.”  

The recent announcements about the modernisation plans for the Saudi Arabian economy were particularly exciting, Jaffrey said.

“I’ve done a lot of business in Riyadh and I can’t remember being as excited about the future, knowing full well that there are lots of challenges ahead.”

“I think the stakes are really high but Saudi is a massive market and, again, at the DIFC in Dubai, we all believe that more trade, more private business, privatisations, more capital flows, inward, outbound, this is good for everybody.

"So we recognise that execution is always a challenge for anybody doing it, but I’m very bullish about it."

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About Author

Richard Hubbard

Group Editor

Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.


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