Investing in the UAE CH 10

Investing in the UAE Introduction Why Investing in Global Markets? 1. Additional investment opportunities 2. Growth potential 3. Diversification benefits 4. Expand efficient range

World Stock Market Capitalization Year-end 2012 United States 43% 27% 11% 9% 6% 4% Other Europe Japan United Kingdom Other Pacific Canada International:

Top Markets in the World

India 8.5% Japan 2.0% Canada 2.7% United States 2.8% United Kingdom 2.8% China 10.6% Australia 3.3% Brazil 3.6% South Africa 4.5% U.A.E. 9.4% Russia 6.9% GDP by Region Five-year average annual percentage change 2003–2007

Why Investing in Global Markets? Investment Opportunities: Two categories of Investment 1- Human Capital Investments 2-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: Three categories: 1- Developed Markets 2- Emerging Markets 3- 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

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