Distinguished guests, ladies and gentlemen, welcome to the 11th annual Hedge Funds World Middle East.
For the fourth consecutive year, DIFC has chosen to serve as a strategic partner to this conference – reflecting our commitment to investors and fund managers operating in this sector, as well as our determination to help develop the skills, depth and sophistication of the financial services industry in the MENA region.
In looking over the programme of this year’s conference, I was struck that the list of speakers and attendees truly reflects the “world” in “Hedge Funds World”.
In fact, I think it is fair to say that the attendance today is as nearly representative of the four corners of the globe, as the population of Dubai itself.
And this is no surprise – the hedge funds industry is by nature global in its perspective. But today’s audience also is perhaps an indication of the changing face of the global investment geography and landscape.
In the MENA region, there are increasingly significant levels of capital available, and investors interested, in alternative investments, and as well, there continues to be a slow but noticeable increase in hedge funds with a MENA focus.
The region in a changing world
It is clichéd to say that the world is ever changing, but it would be an omission not to highlight here today how this change is impacting the investment environment.
As the differentiated rates of growth following the “Great Recession” show, the global economic system is undergoing a slow, but nevertheless, fundamental transformation – a transformation that is seeing emerging markets play an increasingly significant role.
Emerging markets are more important than ever before. They are both a source and destination for global capital. There is increased consumption in these markets, and they will continue to accumulate capital, as a result of balance of payment surpluses driven by natural resource exports, as in the case of Gulf exporters, or manufactured exports, as in the case of India, China and other emerging economies.
Companies indigenous to these emerging markets are capturing international headlines as they expand and acquire assets, whether raw material rights in places such as Africa or Western companies in North America and Europe.
In the MENA region, the accumulation of sovereign and private wealth, a young and fast-growing population and market liberalisation and regulatory reforms are providing the foundation for forecasts of sustained growth across this region for years.
While oil prices have come off their historic highs of 2008 that fuelled spectacular levels of wealth accumulation in the region, it is clear that even at the 70-80-dollar-per-barrel range, Gulf oil producers will continue to accumulate significant wealth that will move through their economies and those of their neighbours.
What’s more, the economies of nearby Asia – which are growing even more rapidly than MENA economies – are positively impacting MENA economies through historic trade, investment and labour linkages.
DIFC and Hedge Funds
Thus, the sense of optimism here in the MENA region – despite the concerns is still with us.
Macroeconomic trends by themselves can’t sustainably grow economies, improve lives or generate returns; you need the proper infrastructure.
And so these emerging markets – within MENA and nearby Asia – need world-class financial centres through which capital can flow, both inward and outward, efficiently and effectively.
That’s part of our mission at the Dubai International Financial Centre, to provide an infrastructure that serves as a catalyst for regional economic growth, development and diversification – as well as greater integration into the global economy.
DIFC has already been recognised for the internationally accepted and world-class legal and regulatory infrastructure it has developed, as well as a strong financial services industry cluster ecosystem that today includes 20 of the top 25 leading global banks and six of the top 10 asset managers.
Of specific relevance to this audience, the centre’s financial regulator, the DFSA, has developed a Collective Investment Law that makes the centre an ideal domicile for funds management, administration and distribution.
The law regulates and permits various types of collective investment funds, including equity and fixed-income funds, property funds, Islamic funds, hedge funds, fund of funds and private equity funds.
This has created a highly secure environment for hedge funds to enter the market and has attracted a steady flow of new hedge fund firms to the region, whether to market existing products to regional clients or to structure DIFC-domiciled products specifically for the region.
What’s more, the DFSA developed and operates a Hedge Fund Code of Practice, the first of its kind to be issued by a regulator. The initiative addresses key operational, management and market-related risks, particularly in the valuation of assets, back office functions and exposure to market risks.
And, of course, as a free zone, DIFC offers numerous advantages, including zero percent corporate and personal income tax benefits for hedge funds and professionals at the centre.
These are just a few specific reasons why DIFC has become the fastest-growing, and the leading, international financial centre in the MENA region.
Its success also comes from the beautiful and welcoming physical infrastructure, a high-end lifestyle city-within-a-city, and access to a large pool of highly skilled professionals who are drawn to Dubai by the modern lifestyle and Dubai’s location in the heart of one of the fastest growing regions in the world.
In fact, DIFC serves a region, stretching from Morocco in the West to India in the East, a region whose GDP is 4.6 trillion US dollars.
And, of course, Dubai itself is the hub of trade, logistics, hospitality and leisure in the MENA region and beyond. The city enjoys a built infrastructure – including the region’s first fully automated metro – on par with its global peers.
Closing
Over the next two days, this conference will review, analyse and predict future trends on issues ranging from the global economy, risk management today and sources of post-crisis alpha, to MENA capital markets and the expectations of the region’s high-net-worth investors.
I am confident that we all will come away from these sessions with fresh insights and direction to guide us in the months ahead.
Once again, let me welcome you to this year’s Hedge Funds World Middle East.
Thank you.
