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‘Phenomenal’ pace of Middle Eastern reforms and new working week will see capital inflows surge in the UAE

Richard Godfrey, Global Co-Head of Securities Services, HSBC

Economic reforms across the Middle East have set conditions for a surge of new liquidity into the region and a re-appraisal of prospects for the region’s financial markets by global investors, according to HSBC Global Co-Head of Securities Services Richard Godfrey.

“The region continues to offer significant investment opportunities and the pace of reforms has been phenomenal. Local markets have reflected this through increased market activity and higher growth,” Godfrey told an audience of more than 400 delegates at the bank’s annual gathering of regulators, institutional investors and exchange managers at HSBC’s annual Markets & Securities Services Middle East forum.

Billions of dollars of fund inflows into the region’s asset markets from around the world have been triggered by a series of reforms to liberalise access for international investors, create new hedging instruments, and increase institutional investor participation.

The reforms have led to the inclusion of key regional equity markets in benchmark indices tracked by major mutual and pension funds, supporting further inflows of long term capital.

And a structural reform to the UAE’s working week announced early in 2022 that aligns the country to the schedule of the world’s biggest capital markets in Asia, Europe and the United States, has set the stage for a further surge of fund flows, Godfrey said.

“The change of working days in the UAE, aligns well with global markets and has been viewed positively by the international community,” said Godfrey.

“It reflects innovative, new thinking about how work-life balance is being incorporated in this region as many markets around the world are testing new models and ways of working.  With the new weekend change, trading volumes on both the Dubai Financial Market and Abu Dhabi Securities Exchange should surge.”

Now in its fifth year, HSBC’s four-day annual forum is the only such securities services event in the region to be run by a custodian bank. Comprising two days of expert panel discussions and two days for delegates to have a series of one-on-one meetings with local market regulators, broker-dealers, global custodians and major institutional investors, the event is designed to promote collaboration and understanding on the most important trends in capital markets.

Key themes to emerge from the forum over the four days include the increased focus on sustainability-linked issuances and the importance of developing common sustainability standards as well as how regulation can successfully oversee the growing role of distributed ledger technology or ‘blockchain’ in finance.

Abdulfattah Sharaf, Chief Executive of HSBC UAE and Head of International, HSBC Bank Middle East Limited, said: “The opportunity for the UAE and wider region is clear and we are focused on this moment to support corporate and institutional clients with their transactional and investment banking needs while expanding our market leading capabilities in sustainable finance, smart infrastructure, digital trade and capital flows.”