OBG talks to Mahmood Ebraheem Al Mahmood, CEO and Chairman, ADS Holding

Interview: Mahmood Ebraheem Al Mahmood

How would you characterise Abu Dhabi’s position in the global trading market?

MAHMOOD EBRAHEEM AL MAHMOOD: Abu Dhabi is well-suited as a global player in the field of trading and capital markets and is known as a low-profile and discreet investor – one of the main factors that has contributed to its success. There are a number of local sovereign wealth funds and other private institutional investors that are critical to financial institutions located in the emirate, and these are best served on the ground.

Being in close proximity to these institutional investors is interesting and healthy for the private sector. Abu Dhabi has been on the buy side of the market for a long time, so the level of sophistication and professionalism of these institutions is very high. In order to provide the required level of service, local companies must be of a certain calibre in terms of technology, human capital and capitalisation. This forces companies to operate as global players from their inception. Additionally, any company that starts trading operations in the emirate will benefit from these institutional investors. Furthermore, we see the sell side of the market evolving among local institutions, and this will further increase efficiencies and force service providers to be more competitive and transparent in their offerings.

What effect has the global financial crisis had on the profile of commodities as investments?

AL MAHMOOD: Investors in the region have historically had exposure to real estate and private equity, but very little exposure to fixed income, currencies and commodities. After the economic decline started in 2008, regional investors began to diversify their investments and allocate some of their funds to commodities. Whether this is physical commodities, futures or options, the requirement and demand is present. Developing a diversified portfolio is a better long-term investment strategy. We also see diversification in terms of investment instruments along with an increasing demand for locally based asset managers, so the requirements are evolving, as in any other market. With the wide availability of information on the internet and other resources, investors are learning very quickly.

How does the private sector help diversification?

AL MAHMOOD: Like other economies around the world, Abu Dhabi is evolving into a mature stage. In all successful economies, the private sector is involved and playing an important role. Within the emirate, the private sector is driven by success and forms a key part of Vision 2030. Recently we have seen private companies diversify their client base rather than rely on one type of client. This will enhance their operations and returns over time. In today’s environment, the private sector must be lean and efficient to operate in the international arena and stay ahead of the curve. Abu Dhabi’s private sector is healthy and strong enough to compete in many industries globally.

To what extent will local financial institutions become market makers in the future?

AL MAHMOOD: It is definitely possible for firms within Abu Dhabi to be global market makers in the future. In short, whoever has the daylight has the market, and this is true throughout the world. Abu Dhabi is becoming one of these destinations.

We are at the point where our market is trying to make the transition from a frontier to an emerging market. Once this classification is achieved, the UAE and Abu Dhabi will appeal to more institutional investors and individuals. Consequently, these investors will be served from within the local market, not only from abroad.

I expect to see more companies coming to Abu Dhabi in order to better serve their clientele. Currently, the local equities market is well served, but there remains plenty of room in the foreign exchange market, especially with regard to international players.