Musings from Dubai

A greying society isn’t a local problem, it is happening across the world. The world’s population has never been older.

We were in Dubai in February as the local private investors are large buyers of fixed income assets.

Bonds and Sukuk (a certificate of ownership to cashflows from an underlying asset) are very popular instruments for investors in Dubai and across the Middle East.

With no state pension, local residents need their investments to pay out, to provide an income and to feel secure in it is not going to dry up. There are a number of large well-known enterprises that issue bonds and sukuk. The stream of future cash flows is more beneficial for older investors than selling units from a growth asset where the price of the asset may be higher or lower when a sale is executed to receive the cash.

Some popular names in the local market include DP World and Emaar Properties. DP World is one of the largest port operators in the world and owns UK ports in Southampton and London Gateway. Emaar Properties is a well know local property developer and owner of landmarks across Dubai.

We are working with a local regulated partner and met with financial institutions with client banks interested in buying local wholesale bonds. The minimum order size for middle east bonds is two hundred thousand US Dollars or more. Below are a couple examples fixed income instruments.

Our lesson from a few days with some major financial service providers is they are looking at ways to work with their clients more digitally and an opportunity to offer clients’ an existing asset well understand at a lower investment minimum will be advantageous to both client and provider. Additionally, a simpler way to present these securities helps the adviser and client in the advice journey.