UAE, ABU DHABI - Economy
CEO, Abu Dhabi Investment Company (Invest AD)
Nazem Al Kudsi is the former CEO of Invest AD. A CFA charter-holder, he has a distinguished investment track record in the Middle East, the US, North Africa, and Far East. For almost two decades, he worked in the sovereign wealth fund arena in leading roles at the Abu Dhabi Investment Authority (ADIA). He was also responsible for a number of international investment portfolios, initially as US technologies portfolio manager in Silicon Valley, and later as a senior fund manager in Japan. In 2005, he was invited by the National Bank of Abu Dhabi to be Chief Investment Officer, responsible for all aspects of the business. In 2008, the government of Abu Dhabi asked him to take the lead at Invest AD, the investment arm of the Abu Dhabi Investment Council, a Sovereign Wealth Fund.
One of the problems in our region is that we have gaps in our knowledge because of the historical instability of the Middle East. In contrast, Western financial and portfolio management theory has had a long history and developed its knowledge, with layers and revisions building on top of each other. In 2008, when we received a mandate, we thought that our people, who are our main strength, should focus on specific regions; those regions being MENA and a part of Sub-Saharan Africa. That knowledge is what we call boots on the ground. We also conduct quantitative analyses; however, in frontier or slightly emerging markets, and especially in Eastern societies, you need to see people; you need to look into their eyes, and talk to them. Therefore, fundamentally, on the ground research is essential for our markets. Invest AD’s strength is that it focuses on specific areas; on a small set of asset classes, and we are building a knowledge base that will hopefully continue to add value for investors.
In most Western countries and developed markets, the loan to deposit ratio is close to one. In Iraq, it was 0.15. This means people did not trust the system and held on to their cash. Today, the Iraqi banking sector is still underdeveloped. Then, there is consumerism, especially in Africa. In places such as Kenya, with Safari Telecom, they have some interesting technologies for payments. Everybody uses their phone for daily commerce, including for such things as paying your plumber. This leads to the third item, which is the empowerment of people. New products and services, such as the iPad and Skype, are now a part of life. Many people may consider African countries backward, but actually they are far more advanced than many of the countries in the region in terms of how they are working together. Teamwork is an endangered species in many parts of the world. We are seeing evidence of highly- educated people coming back to the region and coordinating their policies together in order to attract capital for infrastructure purposes.
In the GCC, it is Saudi Arabia if you take it as the largest market and factor in its ability to diversify the economy and to concentrate on social spending. One of the issues we have in the region is that we are always looking to target products for “VVIPs,” but the average man also has to live. There is growth potential in the middle class as well, and there will be a lot of policies to stimulate the middle class.
Our main strategy is to figure out how we can add value for investors. To add value is to wander in the forest and let the forest lead you to the river. If you get lost, it is the best thing that could happen to you. I would love to see the great examples out there of entities and people that have made it big in any field in life that did not get lost at some point. Too many people put an emphasis on “you have got to do everything right, you have got to act right, you have got to do this or that.” We are a corporate entity; meaning, we are continuously looking for ways to add value to our investors. If I tell you that we have a five-year plan with A, B, and C, it will sound nice, but it is not true. We are starting to get engaged in things we never thought we would. The journey you are on is never the journey you start with. We have our core businesses, we have our funds, and they are doing well. However, I think the real excitement will come from somewhere else; possibly from where we are least expecting to find it.
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