Dubai, a magnet for hedge funds, could be a gateway to the Middle East for Hong Kong businesses, officials say
- There has been an influx of businesses applying for licences to set up office in Dubai, local regulator says
- The emirate wants more partnerships with Hong Kong: Dubai government official
Low taxes, supportive regulatory frameworks, technological innovation and a quality talent pool have made Dubai an attractive home for a growing number of hedge funds, according to two Dubai officials. These attributes could help the emirate act as a gateway to the Middle East for Hong Kong businesses.
The comments came during a webinar on Thursday by Refinitiv and the Dubai International Financial Centre (DIFC), which also released a report during the event.
There are 4,000 millionaires in Dubai, among the highest in the world, coming from the Middle East, India and Africa, with US$966 billion in private wealth, according to Refinitiv. There are already 60 hedge funds either operating or in the pipeline in the city, with more than US$1 trillion in assets under management, according to the DIFC.
“It looks very great going forward,” said Chris Cameron, director of the Dubai Financial Services Authority, the regulator that oversees the DIFC. There has been an influx of businesses coming to the region and applying for licences to set up office. “The Dubai government and the UAE [have] managed to put the city further on the map.”
In the last couple of years, Cameron said he had seen a “tremendously healthy looking licensing pipeline” of businesses looking to set up in Dubai and be “closer to the pool of wealth” in the region.
Dubai and Hong Kong have a lot of complementary opportunities between them that would produce mutual benefits, Hadi Badri, CEO of economic development at Dubai Economy and Tourism, told the Post in a separate interview, without elaborating.
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“We want to be among the top four globally in financial services,” Badri said. “There are some obvious names in terms of global financial hubs – Hong Kong, New York, London and Singapore. We want Dubai to be there [as well].”
Instead of competition, Badri said Dubai wants more partnerships with Hong Kong. There are quite a lot of similarities between the two economies, as they are both gateway cities focusing on areas such as finance and tourism, he added.
“We want to establish Dubai as basically the bank of the region, similar to what Switzerland is as the bank of Europe,” Badri said.
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While Hong Kong, New York and London have historically been the hotspots for hedge funds, recent years have put Dubai on the map, Dominic Rieb-Smith, managing director at JPMorgan, said during the webinar. Culture and environment are very important to running a successful hedge fund these days, and the United Arab Emirates (UAE) offers a different lifestyle that is attractive to new talent, he added.
Strict Covid-19 restrictions in Asia have led to an outflow of hedge funds to the UAE, said Rieb-Smith. There has also been a flood of wealth moving to the region from India, Africa and other parts of the Middle East.
“Regulation, taxation, cost of living, hiring and visas make Dubai an attractive place to be as a hedge fund,” Phillip Lord, co-founder of Pimlico Partners, a Dubai-based investor relations firm, said in a separate interview. There has been a substantial increase in the number of hedge funds coming to Dubai in the past year, he added.
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The Dubai government’s 10-year economic development plan, known as D33, aims to elevate four key sectors: logistics, finance, manufacturing and tourism.
Niamh Taylor, head of EMEA at US hedge fund Schonfeld, told the webinar audience that her firm had moved some of its existing talent to the region. She also pointed out the geographical and time-zone advantages of being in Dubai.
“We’re very excited about the future,” Taylor said, adding that she had witnessed how the region and the hedge-fund community had continued to grow in recent years.
