The success of an organisation depends on the manager’s ability to effectively use resources to achieve business goals. Rapid changes occur in areas such as technology, production methods, marketing techniques, and financial structures. A competent manager should be able to adapt to these changes and implement them into the company’s operations to keep the business ahead in the market competition.

In this article, we will talk about the abilities which a manager needs to possess in order to become an asset for the company he or she is working in. It will deal more with the behavioural/mentoring side of the individual, as a good manager can keep his/her company ahead of the curve by keeping the team members motivated and well-trained to meet the business goals.

Inspiring The Employees

Dominique Harroch, Chief of Staff at AllBusiness, said, “Managers can inspire their teams to excel by setting a compelling vision and leading by example. By clearly articulating a shared purpose and demonstrating commitment through their own actions, managers motivate employees to align their efforts with the team’s goals.”

A good manager should always encourage personal growth and recognise individual achievements, which will, in turn, foster a culture of continuous improvement, thereby boosting team morale.

When managers actively support and celebrate progress, they end up cultivating an environment where employees are driven to surpass expectations and contribute their best efforts.

Provide Clear Communication And Expectations

A good (or great) manager carries the quality of clearly communicating the company’s business goals to his/her team members and how the latter can achieve those targets. The mid-level leaders need to inculcate the habit of setting precise expectations and deliverables paired with clear timelines, apart from letting the employees know what role they exactly should play to fulfil the team goals. Such clarity reduces anxiety and allows everyone on the team to focus on their tasks without unnecessary confusion.

Managers also need to set high but reasonable expectations, to strike a balance between motivating employees and ensuring achievable goals. High expectations inspire team members to strive for excellence, fostering a culture of ambition and continuous improvement, while promoting healthy collaboration between the manager and employee.

Integrity is another cornerstone. Managers need to stick to their word and be honest about the professional challenges the teams are about to face.

Show Empathy And Flexibility

A good manager considers his/her team members humans first and employees second. If as a team leader, you want your team to work hard, then you must lead from the front as well. If you preach work-life balance, ensure that everyone in your team gets to enjoy the perk as well. If you want your employees to work at weekends or late nights, do the same as well.

Great managers understand that a team’s success often hinges on their ability to lead with clarity and decisiveness. Leadership is about more than just managing tasks. It’s about motivating people to achieve their best work.

“Confident leaders don’t shy away from making tough decisions, and their self-assurance instils confidence in their teams. They are willing to take calculated risks, trust their instincts, and stand by their decisions,” Harroch commented.

The ability to understand and manage emotions, both the manager’s and those of his/her teammates, is essential for fostering a positive workplace. Managers, apart from being empathetic and self-aware, should be adept at navigating interpersonal dynamics. They should be able to read the room (judging the workplace atmosphere), diffuse tension, and respond to challenges with calm and composure. This will make them more approachable, apart from strengthening their relationships with their team.

Provide Regular Feedback And Organised Follow-up

The best leaders are the ones who not only proactively monitor the progress of projects but also provide regular, constructive feedback. Regular and consistent check-in meetings not only contribute to employees’ continuous career growth but also demonstrate that a manager cares about the company’s progress and is invested in the success of their employees.

“The best leaders know how to keep their tasks, projects, and teams organised. This means setting priorities, managing time efficiently, and keeping track of deadlines. An organised manager can maintain control over their work environment, which in turn helps the team stay focused and productive. Disorganisation, on the other hand, leads to missed deadlines, confusion, and unnecessary stress,” Harroch said.

Mentorship: A Crucial Trait

A great manager should always be hands-on, when it comes to training and developing his/her employees. The best managers don’t just assign tasks and hope for the best. Instead, they invest in their team’s growth by providing necessary opportunities and resources for learning. Training, just like knowledge, is not a one-time event but an ongoing process.

By prioritising continuous learning, a good manager only empowers his/her team members to take on more responsibilities, grow their skills, and feel confident in their roles. Good managers praise their employees privately, in front of their peers and even their superiors when deserved. They also give credit where it’s due, rather than taking it for themselves. This simple act of recognition fosters a sense of accomplishment and motivates the entire team.

Through continuous training, a brilliant manager puts his/her focus on addressing the employees’ weaknesses, apart from expanding their strengths and skills, seeing strong performers as valuable assets and investing in their professional well-being further. By prioritising mentorship, a good manager creates an environment where individuals are empowered to reach their full potential, ultimately enhancing the team’s collective performance and success.

“Managers can foster a productive work environment by allowing employees to fail safely, which is essential for growth, creativity, and innovation. To do this effectively, they should create a supportive atmosphere where mistakes are viewed as learning opportunities, rather than failures,” Harroch concluded.

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If a small business owner experiences high turnover, they must look honestly—and this can be challenging—at both their behaviour and that of their managers. There are occasions when your management team members actively work against the objectives of the business.

Statistics

A Florida State University survey found that many workers had a variety of problems with their managers. According to the poll, 39% of employees indicated that their supervisors broke commitments, and 37% said that their employers neglected to recognize their efforts.

The survey’s respondents said that 31% of their bosses even gave them silent treatment, and 27% said that their superiors made disparaging remarks about them to other managers and workers.

According to 23% of those surveyed, their managers blamed them for hiding their errors.

Principal Causes Of Turnover

Poor management has a variety of effects on small business turnover rates. Good employees leave companies run by managers who act like dictators and ignore other people’s viewpoints.

High turnover is also a problem for businesses without 360-degree feedback platforms or performance reviews that let employees rank their bosses.

The bottom line is that employees do not want to continue working for their managers when they do not feel appreciated or even when they feel exploited.

Effects Of Turnover On Businesses

Small business turnover is more detrimental to a small firm than it is to a medium or large one since employees in small organizations frequently have several responsibilities and must accomplish more with fewer resources.

If essential workers leave suddenly, production can be put off or even halted. When the surviving workers must fill unfilled roles for an extended period, they burn out. It also has an impact on morale, particularly if a poor boss is firing people. The remaining workers must put up with a controlling boss and additional tasks.

Ways To Make It Better

To learn the precise reasons why employees are leaving the organization, always conduct exit interviews. You have an issue if you keep hearing the same supervisor’s name. Speak with your human resources management about possible solutions.

You’ll probably need to terminate the manager or at least put him on probation. Inform the remaining staff of the issue. Tell them that abusive management practices will not be allowed.

Interact With Workers

To maintain an employee’s engagement, managers should adopt a comprehensive strategy for assuring responsibility, transparency, and effective coaching on their end. Regular one-on-one meetings might not be feasible for managers of larger teams, but general interaction and engagement should be a standard procedure to foster a positive workplace culture.

The top management should always be aware of how the workforce feels about the work atmosphere.

Professional talks also give a competent manager insight into an employee’s thought process and aid in motivating and encouraging him.

Setting A Good Example

Dealing with problems related to time management, change management, performance concerns, reorganization, inconsistent communication, etc. can present several challenges. It can be difficult to prioritize duties in many scenarios, and most workers may become anxious, which will result in poor performance.

Setting an example by managing the difficulties on their own is one of the finest ways for managers to tackle these circumstances. Employees are more likely to feel inspired and motivated, and they are also less likely to leave their jobs due to stress.

Management Techniques

While it’s normal practice to look for external causes when a company experiences high staff turnover, there is an irrefutable chance that the cause could originate from within the nation.

When asked who was to blame for the significant staff turnover or whose inaction was to blame, incorrect leadership has frequently been cited as the culprit. In these situations, businesses can attempt to resolve the issue from the inside by offering leadership talks and training.

However, it is more practical to replace a manager who is in charge of a sizable number of workers leaving the organization with a new management who will match the organization’s mission and goals.

Requesting Feedback

To ascertain whether a manager’s leadership can lead to employee turnover, firm executives should think about soliciting regular input from every employee.

Although an employee may not always feel comfortable discussing such matters verbally, a different line of communication can be established in which staff members can express their opinions and differences anonymously.

This will lessen the staff member’s concern about being judged.

Employee Administration

Although it is customary to prioritize an employee’s debt to the company, the employer’s obligation to the employee should never be disregarded.

Most frequently, high turnover rates are a result of poor treatment of employees by the business.

Good leaders should consider how they may treat their workforce fairly and make the workplace enjoyable for everyone.

Unbiased Instruction

Although hiring a third party for leadership training can be expensive, it can be beneficial for the business in the long term because it can offer a new viewpoint and objective criticism.

Programs for developing leaders are essential to efficient operations since they greatly enhance the capabilities of the company’s current executives.

The post Strategies for better leadership & employee retention appeared first on International Finance.

January 18, 2017: UBS AG, the world’s largest wealth manager, has signed a multi-year strategic framework agreement with EPAM Systems, Inc. (NYSE:EPAM), a leading global provider of product development and software engineering solutions.

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland.

For the past nine years, UBS and EPAM have collaborated to stay at the forefront of technology, positioning UBS as a global leader in innovative financial products and services. The agreement, which is valued at over $300 million, supports the bank’s strategic cost reduction program. This commitment to efficiency allows EPAM to continue to focus on innovative, end-to-end solutions, reducing time-to-market and improving ROI on technology investments.

Mike Dargan, Group Head of Information Technology, UBS, said, “Over the past nine years, EPAM has become a key supplier in helping us meet our clients’ expectations by working closely together with UBS while maintaining commitments to productivity and quality of delivery. We now look forward to evolving this valued relationship further over the coming years.”

Balazs Fejes, Senior Vice President, Co-Head of Global Business, EPAM, said, “The wave of innovation and regulatory changes in the financial services industry has created significant opportunities and challenges. Throughout our long-standing relationship with UBS, we helped them push innovation to drive growth and develop scalable platforms, leveraging our digital design and wealth management expertise and quickly respond to regulatory and market changes. For us, this multi-year agreement with a global financial services leader clearly demonstrates EPAM’s capabilities in the marketplace.”

The partnership between UBS and EPAM spans 10 countries and three continents. In addition to the many business solutions that EPAM has provided during this relationship, innovation will be a large focus throughout this multi-year deal.

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The institution’s Board of Directors approved the Second Expenditure Rationalization, Energy Efficiency and State-owned Enterprise Governance Development Policy Financing (DPF) Project for a total of $1.443 billion, including guarantees from the governments of the United Kingdom ($371.82 million) and Canada ($72 million), a testament of strong international support to Iraq. The DPF’s key development objectives focus on: (i) supporting expenditure rationalisation; (ii) improving energy efficiency; and (iii) enhancing the transparency and governance of state-owned enterprises.

“Despite an ongoing war and low oil prices, Iraq is undertaking bold transformational reforms that will safeguard economic stability and lay the foundations for longer term private sector development and inclusive growth for all Iraqis,” said Ferid Belhaj, Director for the Middle East, World Bank. “The reforms will help build trust between Iraqi citizens and their government, by making the management of public funds more efficient and transparent and expanding social safety nets to reach the most vulnerable segments of the population.”

Separately, the Bank’s governing body also endorsed a $41.5 million operation for the Modernization of Public Financial Management Systems, which supports the overall objectives of the DPF series and aims to support Iraq’s public financial management system.

“This operation is complementary to the objectives of the DPF and will support the government in its goal to improve transparency in the management of public funds and financial information and modernise public procurement practices across many federal and governorate agencies,” said Robert Bou Jaoude, the Bank’s Country Manager for Iraq.

The overall financial assistance package is aligned with the government’s recovery blueprint for 2015-2018. It is also in line with the World Bank’s strategy for the Middle East and North Africa, which calls for renewing the social contract in fragile states, supporting regional cooperation, bolstering the resilience to refugee crises, and initiating reconstruction and recovery programs where needed.

With the new package, the World Bank’s present engagement in Iraq rises to nearly $3.4 billion, including multi-sectoral support to the reconstruction and rehabilitation of areas recently recovered by government forces and a transport corridor investment.

In addition, the Bank is providing wide-ranging technical assistance to the Kurdistan Regional Government.

The post New $1.485 billion package to support Iraq appeared first on International Finance.

November 30, 2016: Verifone (NYSE: PAY), a global provider of payments and commerce solutions, announced that Denmark’s third largest retail company Dagrofa and the country’s fastest growing discount chain REMA 1000 have selected Verifone to enable more options for the way consumers shop and pay in their stores. Dagrofa and REMA 1000 represent significant wins and growing market share for Verifone.

With its chamber of commerce proposing to make all money transactions electronic, Denmark is a leader in the world’s shift towards cashless societies with approximately 80 percent adoption of non-cash payments. The country is also home to one of the world’s most progressive and widely adopted mobile payment schemes. MobilePay, created by Danske Bank, is installed in more than 90 percent of Danish consumer smartphones, and is only surpassed by Facebook and Messenger in app acceptance.

By upgrading to Verifone, Dagrofa and REMA 1000 will be playing a significant role in driving consumer adoption of mobile payment in the country, as it is ready for future mobile payment options such as plans by Dankort, the country’s national debit card, to enable payments through consumer mobile devices.

“We already support MobilePay, but now we are the first in Denmark to integrate mobile payment with card payment in just one piece of hardware. We want to make it even easier for our customers to make digital payments. Verifone has all the necessary functionality and provides an open and very straightforward solution at the cash register. Combining every type of payment in the same device makes life easier for both customers and our employees. Our goal is to deliver excellent experiences related to food, and Verifone’s solution will help us deliver on this goal,” says Dagrofa CEO Per Thau.

“With the Verifone device upgrade, we can ensure our customers will have an easy and convenient experience using their preferred payment method whether it is a Danish or international card, Dankort or MobilePay,” says Torben L. Sørensen, CFO, REMA 1000.

”We are very proud that Dagrofa and REMA 1000 have selected Verifone as their payment solution provider. Our solution benefits both our clients and their customers alike as it can handle many payment methods including all payment cards and many mobile apps,” says Chris Lund-Hansen, General Manager of Denmark, Verifone.

The post Verifone ropes in leading Danish retailers appeared first on International Finance.

Suparna Goswami Bhattacharya

November 22, 2016: Despite being among the most industrialised and developed nations in the world, Japan surprisingly scores very low on financial literacy. According to a survey by the Central Council of Financial Services Information, Japanese are averse to taking financial risk, underscoring the difficulty in reversing the prolonged deflation in the economy. Twenty-five thousand individuals aged 18 to 79 participated in the survey.

One of the key goals of the Bank of Japan’s aggressive monetary stimulus programme, deployed in 2013, was to prompt households to shift money away from deposits and into investment. Although the Japanese government has tried to encourage money to flow from savings into investing, big change has not occurred because of strong loss aversion.

Only 30% of Japanese households have experience investing in stocks and nearly 80% say they would not take on risk even for an investment yielding significant returns.

Asked whether they would invest 100,000 yen ($972) if there was a 50% chance of producing a 20,000-yen gain after a year and the same probability it would produce a 10,000-yen loss, 78.6% said they would not invest.

“The survey illustrates the characteristics of Japanese households, one of which is their strong risk aversion,” said Noriaki Kawamura, the council’s director and head of a BOJ group in charge of promoting financial literacy.

Financial education

Interestingly the survey also showed that respondents who had a financial education were more likely to exhibit desirable financial behaviour, such as making comparisons while purchasing a product.

The percentage of correct answers given by students who had participated in financial education (56.4%) was higher than that of correct answers given by students who had not participated in such education (38.2%), and was also higher than the average for all age groups (55.6%).

Shaun Mundy, international financial literacy consultant and former head of financial literacy at the UK’s Financial Services Authority, says in order to improve financial literacy of a population it is important to go beyond just providing financial education in schools. “One has to make learning finance more fun. My experience suggests that these objectives are most likely to be achieved if a wide range of institutions work together under a well-resourced lead organisation,” says Mundy.

The survey is part of policymakers’ efforts to enhance financial literacy in Japan, which lags behind the United States and Europe, and encourage households to avoid hoarding cash and accept more risk.

A comparison drawn between Japan and the US (which conducted a similar survey) shows the former scores 7% less than US in giving correct reply to questions. In terms of characteristics of behaviour, fewer respondents in Japan felt they had too much debt and more respondents had set aside emergency or rainy day funds than in the United States.

Further, the percentage of those who chose desirable behaviour was 7–17% lower in Japan than in Germany or the United Kingdom.

David Kneebone, general manager of the Investor Education Centre in Hong Kong, said the survey has provided a great reference point with regards to various segment groups. “Japan enjoys long life expectancy, which raises financial retirement challenges if things are not properly planned. And echoing Japan’s research findings, Hong Kong’s survey also revealed that our people lack adequate retirement planning for our retired years. We look forward to more peer collaboration and sharing of best practices to help raise awareness of the need to manage money better throughout life.”

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July 5, 2016: Global professional services consultancy Turner & Townsend has opened an office in Kenya as the country sees solid economic growth, with the outlook for continued investment in infrastructure and construction.

The company is currently involved in more than 40 projects across Africa, mainly in the telecoms, oil and gas, infrastructure, health, education, and hotel and leisure sectors. Much of this portfolio has been built from the consultancy’s offices in Johannesburg, South Africa and Kampala, Uganda.

The independent consultancy now looks to expand further into Kenya, the largest economy in the East African region, introducing new services and developing skill sets in the region.

Heading up the office is newly-appointed Daimon Keith who is the country manager for Kenya. Keith is a chartered surveyor with considerable international experience. Prior to his appointment, he was responsible for leading the rail sector in the UK for Turner & Townsend, working with Network Rail, London Underground and Transport for London.

His team is expected to quadruple in the next two years, supported by staff from other regions, who will transfer relevant skillsets and support the ambitious growth plans for Africa.

Daimon Keith, Country Manager for Turner & Townsend in Kenya, said: “Nairobi is our second East African office, joining Kampala, Uganda, set up in 2012. In Kenya, and other East African countries, the significant GDP growth rates mean that we will see multi-location property programmes and ambitious infrastructure plans, seeking inward investment that will require new skills. There are also substantial natural resource reserves in East Africa.

“The opportunities for us are significant across the sectors we support. Over and above traditional quantity surveying services, we offer project management, project controls and dispute resolution services.”

“Combined with our knowledge and understanding about the local market and its supply chain, our service portfolio gives us a differentiated and competitive proposition for companies in East Africa that need project support to secure greater capital efficiency and create more affordable assets.

The post Turner & Townsend opens new hub in Kenya appeared first on International Finance.

Joel Kukemelk

February 11, 2015: As a Europe-based GCC equity fund manager, we are well-aware of the international investors’ views, questions, hopes and doubts when it comes to investing in the Arabian peninsula. So far, global investors have overlooked the fast growing Gulf region – partly also because over the last decade, energy rich Middle Eastern countries have built up a reputation as a source of funds for foreign companies, not as a place where foreign investors should invest themselves. But foreign investors are finally starting to notice the region. However, as the majority of the potential foreign investors don’t have any previous experience at all with the region, it’s a slow process and a lot of education has to be done.

MSCI upgrade to the UAE and Qatar in 2014 has definitely helped to garner more interest for the region (combined weight of 1.6% in MSCI EM index). Dubai winning the opportunity to host EXPO 2020 (first time ever in the Middle East), its airport eclipsing London’s Heathrow in international passenger traffic, Qatar hosting the football World Cup in 2022 (first time ever in the Middle East) are small but necessary milestones in demonstrating to the world that this part of the Middle East has reached an inflection point.

With traditional big emerging markets – BRIC countries – struggling to show growth, international investors are more willing to look at alternative places for long-term investments. GCC’s strong economic growth numbers coupled with sound fiscal management grabs the attention of the new foreign investors.

But nothing comes easy or quickly. Many European investors have developed strong perceptions when it comes to the Middle East and these are related to war, unrest, instability, constant geopolitical tensions, different culture, harsh desert climate, huge oil revenue dependency etc. To make matters worse, many foreign investors put all the Middle East countries in the same regional risk basket despite countries being completely different from each other. To break these dogmas, asset managers need to spend a lot of time introducing the region, but of course the GCC countries could help as well by distinguishing themselves more from the broader Middle East region.

GCC has a lot to offer to foreigners Let’s look at the numbers. GCC countries have 10% of MENA population but 50% of GDP. They hold 45% of world oil reserves and 20% of gas reserves. They have current account and budget surpluses though it is true that the 40+% fall in oil prices in 2014 might force them to tap their huge $2 trillion reserves (more than 100% of GCC GDP) in 2015 for the first time in many years, strong reserves built from energy wealth revenues, fixed currency rates, fast economic growth, multi-year long investment programs, young and growing demographics are exactly what long-term investors are looking for.

Even better, GCC stock markets have low correlation to other world stock markets making them an ideal component to a diversifiedinvestment portfolio. The biggest risks are sudden unexpected energy price falls (unlikely, but for example the 40% oil fall witnessed in 2014 continuing at the same pace in 2015) and escalations in geopolitical tensions. Potential benefits, however, strongly outweigh these risks.

GCC stock markets are already sizeable. The total market cap exceeds $1 trillion, i.e. 2% of global stock markets. Saudi Arabia makes up half of that and with the Kingdom expected to open up its stock market to foreign investors in the first half of 2015, investors can’t turn a blind eye to the region any more.

Foreign investors’ exposure to the region is light years away from what it should be going by the market capitalisation. Some emerging and frontier markets that are smaller have managed to attract much more foreign investor attention. For example, stock markets in Russia, Turkey, Indonesia, Singapore, South Africa are all smaller than GCC combined stock market cap, yet foreign investors are much more familiar with those countries. Due to long-standing active interest, there are a number of international ETFs and country-specific mutual funds being offered in the market.

If energy rich GCC countries want to attract more foreign investors, then proceeding with the integration process within the union and distinguishing themselves more from the wider MENA region can make foreign investors look at the Middle East differently and unbundle some countries from the others. This would mean lower risk premiums for countries with stronger macro numbers and long-term prospects.

Foreign vs regional-based GCC fund managers

Joel Kukemelk	Should foreign investors prefer regionally-based funds or international funds? Practice shows that when we are talking about country-specific funds, usually preference is given to locally based funds. But for a regional fund, it becomes trickier.First of all, a fund with a regional mandate can’t be locally-based since it can’t be simultaneously present in all of the countries. Secondly, if a regional fund is based in one member country, the investment manager is likely subject to home-market bias.

Thirdly, practice has shown that for a regional fund being based in one member country doesn’t guarantee better returns compared to the funds that are run outside of the region.

And lastly, when international investors are investing money in a far-away region whee they don’t have experience with a local manager, they might feel considerably more unease than investing in an internationally-based regional fund where a fund manager understands the needs of the local investment climate.

For example, European asset manager might be willing to invest in the Middle East more willingly when they can deal directly with fellow European asset management companies who can demonstrate long-standing experience in investing in the region. In short, an unknown region with a known asset manager is better than an unknown region with unknown asset manager.

The market for regional funds based outside the region itself has existed already for a long time and for a good reason. With growing foreign investor interest towards the GCC stock markets, it’s possible that additional foreign funds will be launched but today’s investment climate also offers a valuable opportunity for all the existing GCC fund managers to market themselves and the long-term potential of the whole GCC region among foreign investors.

Joel Kukemelk is Fund Manager of LHV Persian Gulf Fund

Also Read:

GCC can weather the fall in oil prices

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IFM Correspondent

January 5,2015:

In which countries does LHV have investment experience?

LHV has experience in investing across the world. LHV Asset Management holds the second biggest market share in Estonian mandatory pension fund market, which was launched more than a decade ago. We have a global mandate there, both for equities and fixed income. Due to our superior long-term returns in local pension fund market, we have managed to grow our market share aggressively with AUM more than €0.5 bn.

This global approach made it easy for us to launch UCITS compliant GCC equity fund – LHV Persian Gulf Fund – in 2008 since we felt that such a product was missing in the market. We have been very successful with this GCC fund ever since, beating local competitors and attracting foreign investors. LHV Persian Gulf Fund invests in all six GCC countries – the United Arab Emirates, Qatar, Saudi Arabia, Oman, Kuwait and Bahrain.

Why did you launch GCC equity fund and not MENA fund in 2008?

Our reasoning was that bundling together energy exporting and energy importing countries in the Middle East makes little sense. We wanted to give investors the opportunity to participate directly in the stock markets of the countries that invest funds received from selling their energy products back into the real economy

On which sectors does LHV Persian Gulf Fund focus on?

With LHV Persian Gulf, we want to benefit from the long-term trend where energy rich governments pump out oil and gas and invest the received proceeds in their economies with the ultimate goal of diversifying their economies away from oil and gas. We are bottom up stock pickers in the region putting a lot of emphasis on the quality and transparency of the managements but, all in all, this means that there are a lot of good investment opportunities in the region’s financial and real estate sector and services sector that caters to the region’s young and relatively high buying power population.

Going forward, in which countries do you see most potential in the GCC region?

We have strongest conviction in the UAE, Qatar and Saudi Arabia stock markets, which are our fund’s biggest holdings. The UAE is in a very strong cyclical upswing, Qatar and the UAE got into MSCI EM index in June 2014 and at the end of November 2014 their weights in the index were increased further (combined weight of 1.6% in MSCI EM index). Foreign investors who still have little exposure in the region are taking more and more notice of it. Saudi Arabia market is opening up in H1’15 and this is something we’ve been waiting for a long time since launching the fund seven years ago. Qatar holds FIFA World Cup in 2022 and Dubai has EXPO in 2020. All in all, GCC countries have $3.5 trillion worth of investment projects (200+% of GDP) that need to be executed in the next 10-15 years. This will continue to drive fast economic growth in the region for many years to come.

In the first half of 2015, the Saudi Arabian stock market will finally be accessible for foreign capital. What changes do you foresee for existing companies and for investors?

On one hand, this increases competition but on the other hand helps to bring additional investors to the region. With foreign investor participation in the GCC markets very low, we expect to see huge capital inflows to the region’s stock markets over the next few years. When it comes to GCC, instead of passive index-based investing I would advise a more active and bottom up approach in this highly retail investor driven market.

Saudi companies will need to increase their transparency and corporate governance and investor relations practices even further with increasing foreign investor participation. Some companies have high standards already today but some have still very basic standards.

How long did it take for you to settle down? How many years do you think it will be before you see serious competition from the newcomers?

Opening accounts in all the markets and getting familiar with all the peculiarities of the region took considerable time. It’s still frontier/emerging part of the world, although very fascinating. We’ll definitely see newcomers to the region but we have long-standing experience and a strong track record. We welcome all new entrants to the market as this helps make more investors aware of the long-term potential this region holds. And I’m sure the investors will eventually find the best investment vehicle to use when investing into the region. Hopefully this will bring some new investors to our fund as well, as we’ve been chosen as “Best Equity GCC Fund of 2012” and “Best Equity GCC Fund of 2013” by the highly regarded Zawya Thomson Reuters.

To cater to the high demands of institutional investors, we decided to re-domicile LHV Persian Gulf Fund from Estonia to Luxembourg. This is set to be complete in March 2015 offering European investors the opportunity to invest in the high growth GCC markets via a Luxembourg-domiciled fund with a long and strong track record.

Should GCC investors be worried about the 40+% oil price decline we saw in 2014?

During times when oil price fluctuations aren’t big, LHV Persian Gulf Fund’s correlation to oil is very low since the fund does not invest in the energy companies. But when oil price movements become large, correlation shoots up over the short term since it’s still an energy rich region. That’s exactly what we’ve seen. Oil price has decreased by over 45% ytd and this caused investor sentiment in the GCC to plummet over the short term effectively erasing all of LHV Persian Gulf Fund’s YTD returns in the last 3 months. As a result, valuations have turned really compelling now with 2015 estimated index P/Es are now in the range of 8x-12x across the GCC. As GCC countries have little debt and their sovereign wealth funds have assets of more than $2 trillion (more than 100% of GDP!), I strongly feel that they are very well positioned to weather the short-term downfall in energy prices without having a meaningful long-term negative effect on the GCC economies’ growth story and future potential.

Joel Kukemelk

Going forward, in which countries do you see most potential in the GCC region? We have strongest conviction in the UAE, Qatar and Saudi Arabia stock markets, which are our fund’s biggest holdings. The UAE is in a very strong cyclical upswing, Qatar and the UAE got into MSCI EM index in June 2014 and at the end of November 2014 their weights in the index were increased further (combined weight of 1.6% in MSCI EM index). Foreign investors who still have little exposure in the region are taking more and more notice of it. Saudi Arabia market is opening up in H1’15 and this is something we’ve been waiting for a long time since launching the fund seven years ago. Qatar holds FIFA World Cup in 2022 and Dubai has EXPO in 2020. All in all, GCC countries have $3.5 trillion worth of investment projects (200+% of GDP) that need to be executed in the next 10-15 years. This will continue to drive fast economic growth in the region for many years to come.

In the first half of 2015, the Saudi Arabian stock market will finally be accessible for foreign capital. What changes do you foresee for existing companies and for investors?

On one hand, this increases competition but on the other hand helps to bring additional investors to the region. With foreign investor participation in the GCC markets very low, we expect to see huge capital inflows to the region’s stock markets over the next few years. When it comes to GCC, instead of passive index-based investing I would advise a more active and bottom up approach in this highly retail investor driven market.

Saudi companies will need to increase their transparency and corporate governance and investor relations practices even further with increasing foreign investor participation. Some companies have high standards already today but some have still very basic standards.

How long did it take for you to settle down? How many years do you think it will be before you see serious competition from the newcomers?

Opening accounts in all the markets and getting familiar with all the peculiarities of the region took considerable time. It’s still frontier/emerging part of the world, although very fascinating. We’ll definitely see newcomers to the region but we have long-standing experience and a strong track record. We welcome all new entrants to the market as this helps make more investors aware of the long-term potential this region holds. And I’m sure the investors will eventually find the best investment vehicle to use when investing into the region. Hopefully this will bring some new investors to our fund as well, as we’ve been chosen as “Best Equity GCC Fund of 2012” and “Best Equity GCC Fund of 2013” by the highly regarded Zawya Thomson Reuters.

To cater to the high demands of institutional investors, we decided to re-domicile LHV Persian Gulf Fund from Estonia to Luxembourg. This is set to be complete in March 2015 offering European investors the opportunity to invest in the high growth GCC markets via a Luxembourg-domiciled fund with a long and strong track record.

Should GCC investors be worried about the 40+% oil price decline we saw in 2014?

During times when oil price fluctuations aren’t big, LHV Persian Gulf Fund’s correlation to oil is very low since the fund does not invest in the energy companies. But when oil price movements become large, correlation shoots up over the short term since it’s still an energy rich region. That’s exactly what we’ve seen. Oil price has decreased by over 45% ytd and this caused investor sentiment in the GCC to plummet over the short term effectively erasing all of LHV Persian Gulf Fund’s YTD returns in the last 3 months. As a result, valuations have turned really compelling now with 2015 estimated index P/Es are now in the range of 8x-12x across the GCC. As GCC countries have little debt and their sovereign wealth funds have assets of more than $2 trillion (more than 100% of GDP!), I strongly feel that they are very well positioned to weather the short-term downfall in energy prices without having a meaningful long-term negative effect on the GCC economies’ growth story and future potential.

You have won two IFM awards — Fastest Growing GCC Equity Fund & Best Fund Management Company in Estonia. What does this recognition mean to you?

It’s always good to receive international recognition. It validates our investment strategy and assures our clients that they have made the best possible choice when opting for our services.

About LHV

LHV was founded in 1999 and it offers its services in Estonia, Latvia, Lithuania and Finland. LHV Persian Gulf Fund was launched in 2008, it is publicly offered in Sweden, Finland, Norway, Estonia, Latvia and Lithuania. LHV Asset Management also manages mandatory (21% market share in Estonia) and supplementary pension funds in Estonia. LHV Persian Gulf Fund is a UCITS-compliant long-only GCC equity fund investing in the UAE, Qatar, Saudi Arabia, Oman, Kuwait and Bahrain. Fund manager Joel Kukemelk has a high A rating from Citywire and the fund has been chosen as ”Best Equity GCC Fund of 2012” and “Best Equity GCC Fund of 2013” by Zawya Thomson Reuters

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