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Bringing on board young spirits to act as translators with the new generation
PAGE 3 ··············································· ··············································· The historical genesis of Markaz Corporate Governance PAGE 4 A new collaboration between Markaz & KES PAGE 7 Markaz MENA real estate projects achieving progress in GCC PAGE 10
1 engage Issue 3, Q3 2016
IN THIS ISSUE
3 COO’s letter 4 Markaz from the past 5 Markaz news 7 CSR activities 9 Informed opinion 10 Getting to business 18 Laws & regulations 19 Personal interest
EDITORIAL TEAM
Alrazi Albudaiwi: Editor-in-Chief; Sondos Saad: Assistant Editor-in-Chief; George Kunnumpurathu: Editor International Investment; Anjali Parkhi: Editor Human Resources; Khaled Almubaraki: Editor MENA Real Estate; Azzam Al-Otaibi: Editor MENA Equities; Hammad Khan: Editor Advisory; Abdulrazzaq Razooqi: Editor Corporate Finance; Deena Alrefai: Editor Private Banking; Murtaza Pattherwala: Editor Published Research; Anu Abraham: Editor Compliance and Risk Management.
2 FOREWORD COO’s letter
edge-based institution; where- we need to continuously attract by, we seek to be the experts highly qualified and ambitious in the target markets in our young candidates, who will act respective core activities. as translators with the new You have successfully made generation, who will challenge Markaz achieve this status as us, not only into evolving, but evidenced by the clients, eco- also to trust them in ultimately nomic development agencies, taking the company forward. and international media that Our collective role is to train continue to seek your advice them, to mentor them with our or quote your research. It is values and principles, and to not easy to maintain efficient- provide them with our expe- ly this level of expertise in a rience and support that will highly dynamic environment give them the platform and for a company of our mod- the vision to formulate a better erate size. Towards that, we future for Markaz. have to rely on collaborative teamwork, ongoing communi- Ali H. Khalil cation across the organization, Chief Operating Officer and by sharing and leveraging information. Few years ago, we em- barked on replacing our leg- acy systems by dynamic and integrated ones. This means Dear Colleagues; simply that our IT systems will In this Issue of Engage, I share with you what be constantly modified and keeps me most challenged as the COO at Markaz; improved to help us adapt to the fast changing environment, it is the recognition of the unsettling certainty that and cost-efficiently comply the world is dynamic, it changes faster than our with complex reporting and ability as individuals to adapt, and faster than regulatory requirements, and to help us monitor and manage any individual’s capability to build new skills. our financial and operating risk. And that is ok; certainly one should not let these Risk assessment and man- inalienable facts of life frustrate us to a stall. But agement is a core success rather, at Markaz, it has encouraged us to face the factor. We view risk and its components as very dynamic, challenge and implement a strategy that makes and increasing in complexity such dynamic environment a natural habitat in with the fast development of which Markaz continues to excel. investment products, related regulations, interconnectivity The challenge of change for have equally contributed in of markets, and the arising Markaz is even more acute, creating this advantage by pur- geopolitical risk. Towards this, since seeking excellence, stay- suing the following initiatives: we make it a priority to remain ing ahead of competition in ev- vigilant in reading ery aspect, and adopting best We focused on being an and assessing the practices is at the core of our underlying changes. operating strategy. Towards information and knowledge- Finally, under- that, your ability to cope with based institution; whereby, we standing the chang- change is the very competitive seek to be the experts in the es prompted by the advantage that has allowed emerging new gen- Markaz to prosper and develop target markets in our respective eration, and posi- over the several market cycles core activities. tioning our company during the past four decades. to better serve their All of our units, whether rev- We focused on being an needs in the future is critical to enue generating or support, information and knowl- our sustainability. That is why
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MARKAZ FROM THE PAST MARKAZ NEWS The historical genesis of H.H the Amir Markaz Corporate Governance receives Mr. Manaf Alhajeri Markaz Board of Directors 1999 among KDIPA convoy
Left to Right: Sheikh Abdullah Al-Sabah; Mr. Jassem Al-Mousa; Mr. Diraar Alghanim; Mr. Ibrahim Alraqum; Mr. Sulaiman Al-Dalali; Mr. Bader Al-Saad
Markaz Board of Directors 2016
His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah hosted, at Bayan Palace, Minister of Commerce and Industry and Chairman of Kuwait Direct Investment Promotion Authority (KDIPA) Dr. Yousef Mohammad Abdullah Al-Ali, accompanied by General Director of the investment authority, Sheikh Dr. Meshaal Jaber Al-Ahmad Al-Sabah, and Board members. Left to right: Mr. Adel AlGhannam; Mr. Fahad Al-Jouan; Mr. Ayman Alshaya; Mr. Faisal Al-Jallal; Mr. Manaf Alhajeri, as a board of KDI- Mr. Diraar Alghanim; Sheikh Humoud Sabah Al-Sabah; Mr. Fouzi Al-Mukaimi PA, was received at Bayan Palace among the authority’s convoy to present the 2015 Through its history that extends for more than 40 years, Markaz’s KDIPA annual report to His Highness the Board of Directors has always placed special emphasis on corpo- Amir, who was also briefed about the lat- est accomplishments by the authority. rate governance. This keenness was manifested in the company’s In 2015, KDIPA received a total of 14 prudent policy that was transformed into a governance system applications for investment licensing and prior to the issuance of related laws and legislation. Markaz granting incentives with a total value of KD 585,029,939. Of this, 68.8% were li- implemented this policy with great efficiency, thus turning the censed and approved and 31.2% under company into one of the few Kuwaiti private institutions to de- study. velop an official corporate governance structure with voluntary compliance. Markaz also took the necessary steps to determine the level of governance risks and set adequate internal controls and administrative systems for risk mitigation in line with the best international practices.
4 MARKAZ NEWS Markaz family welcomes Ramadan with the traditional Graish gathering Every year, Markaz family gathers in the Graish event, a tradition on which banquets are presented and all kinds of meals are prepared, to celebrate the beginning of the holy month of Ramadan. This year, Graish was a success with all your tasty and delicious dishes. Your contribution is what helps accomplish such great events.
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MARKAZ NEWS Markaz holds the Annual Ghabga for its employees
What better way to celebrate the essence of Ramadan than to be with the people you care about? Markaz family once again gather in the annual Ghabga event at Symphony last June to celebrate the holy month of Ramadan and affirm a strong bond with the company and with each other.
6 CSR ACTIVITIES A new collaboration Markaz renews between Markaz & KES partnership with KRCS A new training program on “sound governance in Markaz recently renewed its “Humanitarian the state’s organizations and the administrative Partner” relationship with the Kuwait Red reforms needed” Crescent Society (KRCS) to support the orga- nization in helping needy patients in Kuwait and Out if its commitment to introduce principals of good educating low-income families. This partnership governance in the public sector as stated in its CSR charter, Markaz’s collaboration with Kuwait Economic Society (KES) is a continuation of cooperation between KRCS has resulted in creating a customized training program to the and Markaz over the past years. state’s organizations titled: “sound governance in the state’s organizations and the administrative reforms needed.” Mr. Alrazi Yousef Albudaiwi, Vice President - Media The training program will hand over a special booklet in- and Communications at Markaz said: “Markaz is really spired by KES’s previous series of publications, lectures and proud of its partnership with Kuwait Red Crescent So- roundtable discussion that brought key local stakeholders with ciety, which is one of the well-reputed non-profit organizations international expertise on governance. in Kuwait that acts as a link between humanitarian action and The booklet discusses different factors including: the partners who believe in helping humanity. We truly thank the people behind it and its staff for the dedicated efforts to The citizen’s rights to access Accountability serve humanity in Kuwait and around the world.” services and its relation to Capacity building and enrich- Mr. Albudaiwi added: “This partnership comes from Markaz’s good governance ing organizations corporate social responsibility strategy that aims at fulfill- A governance and transpar- The ease of doing business ing the company’s ency charter for public sector and the relation of that with These relationships act as a link CSR responsibil- Conflicts of interest as an ob- administrative reforms ities through three stacle to good governance Internal audit and risk manage- between humanitarian action main pillars, which HR policies required for good ment and the partners who believe in are building human governance The importance of good gov- helping humanity capabilities, aligning Methods of Meritocratic ap- ernance and institutions effec- our business envi- pointment of public sector tiveness ronment with the principles of sustainable development, and leaders Fighting corruption and its rela- promoting good governance in the business environment. Our Performance measurement tion with administrative reforms activities within this strategy includes a variety of topics that target achieving sustainability; among which is the humanitarian and health side for the society we work in.”
To contribute to KRCS’s initiatives, please visit www.krcs.org.kw.
Alrazi Y. Albudaiwi receiving a certificate from Lama F. Al-Othman from Kuwait Red Crescent Society
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CSR ACTIVITIES Markaz continues to Markaz sponsors Indian support Children’s Cancer Community School’s Center of Lebanon distinguished students
As part of its commitment in cooperation with ICSK based to grow human skills and build on their academic performance, a well educated generation grades and behavior at school of youth who can become an during the year. So far, more added value to society, Markaz than 50 students have benefited announced sponsoring the dis- from Markaz sponsorship.” tinguished students of the Indian Al-Budaiwi added: “this Community School in Kuwait. sponsorship is part of Markaz’s Mr. Alrazi Y. Al-Budaiwi, corporate social responsibil- VP, Media & Communications ity strategy that is based on Department at Markaz stated: three main pillars, which are “Markaz’s sponsorship of the a) building human capabilities, distinguished students at ICSK b) aligning our business envi- aims at supporting these stu- ronment with the principles of dents and motivating them to sustainable development, c) and continue their academic suc- promoting good governance in Markaz sponsored a fundraising gala dinner organized in cess. The students are selected the business environment.” May 2016 by the Children’s Cancer Center of Lebanon (CCCL). The event was held under the patronage of HH the Emir of Kuwait, Sheikh Sabah Al Ahmad Al Jaber Al Sabah, and aimed at getting the support of Kuwaiti society for the Lebanese and Arab children suffering from cancer and being treated at CCCL. CCCL was established in Beirut in 2002, aiming to cover the expenses of cancer treatments for children with no medical insurance. The Center is located at the American University of Beirut and works in collaboration with Children Research Hospital in Memphis, Tennessee, USA.
Markaz sponsors Faculty of Medicine’s graduation ceremony
bricks of building the society, especially investing in education will contribute to in the fields of education and developing preparing successful, efficient models the skills of Kuwaiti youths. of the youths who are capable of serving Kuwait and developing it, which will reflect We believe that investing in positively on developing the business education will contribute to environment in Kuwait, especially in the successful, efficient youth who private sector.” This sponsorship comes as part of Markaz are capable of serving and corporate citizenship strategy that aims at developing Kuwait fulfilling the corporate social and economic responsibilities through three main pillars, Mr. Alrazi Y. Al-Budaiwi, VP, Media and which are a) building human capabilities, Alrazi AlBudaiwi receives an honoring shield at the graduation ceremony of the Faculty of Medicine Communications at Markaz said: “Markaz b) aligning our business environment with is keen to encourage this youths segment, the principles of sustainable development, As part of its strategy to build human as they are the doctors of the future, and c) and promoting good governance in the capacity in order to enable and maintain support them in achieving their goals. business environment. Our activities within a sustainable future, Markaz has spon- Thus, Markaz sponsorship of the gradua- this strategy include several variety of top- sored the graduation ceremony of the 7th tion ceremony of the Faculty of Medicine’s ics aimed at sustainability, including the year students of the Faculty of Medicine, students emphasizes its appreciation to development of the capacities of young Kuwait University. This sponsorship re- their efforts to learn and achieve sus- people and enabling them to utilize their flects Markaz’s continuous commitment tainability.” abilities towards achieving a sustainable to supporting the youths, who are the Mr. Al-Budaiwi added: “We believe that future.”
8 INFORMED OPINION What’s causing the sharp decline of liquidity in Kuwait’s stock market? By: Azzam Al-Otaibi For the past few years, the Kuwait stock market witnessed a sharp drop in trading value as market liquidity witnessed a declining trend every year since 2013. In 2013, the total market value traded was KD 11.3 billion. That number dropped by KD 5.2 billion in 2014 reaching KD 6.1 billion value traded and decreased by KD 2.1 billion in 2015 to reach KD 4 billion. There are many reasons behind this sharp decline, and we shall discuss these reasons.
Market profitability played a major role in the decline in cutting other subsidies such as those on electricity and water market liquidity as profits were not very encouraging. The end for some segments, which we believe will act negatively on the of year corporate earnings revealed a clear downward trend KSE listed companies’ profitability and consumer expenditure. in growth over the past several years. Total profit growth de- This will also lead to a reduction in government spending and clined from double digit growth in 2012 of 14% to 9% in 2013, thereby result in real GDP slowdown. The banking sector will 3.7% in 2014 and be predominantly affected as less government spending will A lack of depth and diversity in kept decreasing to decelerate loan growth, while declining asset prices will affect terms of sectors is also a reason 0.5% in 2015. banks’ asset quality. The sharp decline The Kuwaiti market’s lack of depth and diversity in terms of for declining investor interest in crude oil prices sectors is also a reason for the decline in investors’ interest and market liquidity also weighed in and the market’s liquidity. Getting exposure to the main drivers heavily on the mar- of the Kuwaiti economy (government and consumer spending) ket’s liquidity. In the last few years, oil prices have fallen sharply is challenging as the major companies benefiting from this from around USD 110 in June 2014 to USD 49 today driven by spending are not listed on the market. On the other hand the the surge in shale oil production in the USA, leading to signifi- banking sector, a market heavy-weight and obvious beneficiary cant revenue shortfalls for major oil exporting countries. Higher from government and consumer spending, is suffering from production from Iraq, Iran, China and Argentina has also been problems of its own, as the continuity in high provisioning pressuring the oil market’s outlook. has been yielding minimal improvements in banks’ profits. As prices of oil declined, Kuwait along with other GCC The CMA’s stringent regulations on their part further ex- countries have been facing large budget deficits, and thus the acerbated the already existing liquidity crunch in a market governments are taking several austerity measures to deal with that never fully recovered from the aftermath of the 2008 these deficits. These measures include raising fuel prices and global crisis.
KD
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GETTING TO BUSINESS Markaz MENA real estate projects achieving progress in GCC In 1998, Markaz established a dedicated MENA Real Estate division. Markaz MENA Real Estate team of 26 professionals currently manages approximately KD 290 million in assets and operates regional offices in Kuwait, Riyadh, Khobar, Dubai and Abu Dhabi. In addition, Markaz actively invests alongside its investors exhibiting a strong confidence in its products and investment managers. The following are glimpses of some of Markaz RE projects:
Boardwalk Residence Abu Dhabi, UAE Boardwalk Residence is a residential project on Reem Island that targets upper mid and high income tenants. The project comprises 36 units with a mix of 1, 2 and 3 bedroom apartments as well as two 3 bedroom duplexes with direct access to the beach. The project is expected to be completed by November 2016.
The building amenities include: Rooftop infinity pool Fully equipped gym Rooftop garden & barbeque area Security features such as cameras, & security barrier Underground car park Shams Residence 1 & 2 Abu Dhabi, UAE Shams Residence 1 & 2 are two build- ings under construction on 2 adjacent plots on Reem Island. The project comprises a mix of 1, 2 and 3 bedroom apartments. The project is expected to be completed in Q2 2018.
The building amenities include: Swimming pools Fully equipped gym Landscaped areas with seating areas Kids’ play area Security features such as cameras, & a security barrier Underground & podium levels car parks
Dubai Business Bay The building amenities include: UAE Swimming pool The latest project under develop- Fully equipped gym ment is a residential building in Landscaped areas with seating areas Business Bay area in Dubai. It com- Rooftop garden & barbeque area prises a mix of 1, 2 and 3 bedroom Kids’ play area apartments. Construction started Security features such as cameras, in August 2016 and is expected to & security barrier be completed in Q2 2018. Underground car park
10 Al Maha Tower Bnaid Al Gar, Kuwait Al Maha Tower is a 22 floor residential tower located just behind the Masaleh towers in Bnaid Al Gar. It contains 20 x 2BR units sized 120sqm, 37 x 3BR units sized 180sqm and a 4 BR duplex sized 250sqm, along with 2 retail areas on the ground floor to be rented as a coffee shop. The project is expected to be completed in Q4 2016.
The building amenities include: Rooftop infinity pool Fully equipped rooftop gym Rooftop garden & barbeque area Landscaped gardens with furnished seating areas Large indoor & outdoor kids’ play area Security features such as cameras & security barrier Underground car park Al Nada Tower Large inbuilt closets & cabinets Dasma, Kuwait Maids’ rooms & bathrooms Al Nada Tower is a 27 floor high end residential tower, located behind the diabetes institute in Dasman, Kuwait City. It contains 25 x 2BR units size 120sqm, and 50 x 3BR units sized 180sqm. It is expected that the project will be completed in Q4 2017.
The building amenities include: Rooftop infinity pool Large lap pool on the ground floor Fully equipped Gym Roof-top garden & barbeque A multipurpose room for tenant use Landscaped gardens with furnished seating areas Large indoor & outdoor kids’ play area Security features such as cameras & security barrier Underground car park Large inbuilt closets & cabinets Maids’ rooms & bathrooms
Al Rihab Riyadh, KSA Al Rihab Project occupies a 31,036 square meter land in Riyadh and aim to transform it to a residential complex with 144 units targeting middle income households looking for duplex villas or apartments to rent. The team has already finished the licensing phase and started the construction of the modern building which will include:
The building amenities include: Duplex Villas, 3, 2 & 1-bedroom apartements Swimming pool Fully equipped gym Landscaped gardens with seating areas Recreational & barbeque area Indoor & outdoor kids’ play area Security features such as cameras & security barrier Car park
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GETTING TO BUSINESS Voluntary Tender Offers The impact of e-commerce and new CMA regulations on industrial real estate By: Abdulrazzaq Razooqi By: Ahmad Hayat Voluntary tender offers are Vacancy rates of US offers to voluntarily acquire publicly-listed companies. A industrial properties voluntary offer involves ac- declined due to de- quiring a 100% of the com- mand pressures. pany. The offer price is to be determined by the Acquir- Faster delivery, convenient er and no minimum price is shopping, and lower prices are enforced. The Acquirer is to the added values that e-com- submit an Offer Document de- merce brings to its 211 million tailing information about both users in the United States. the Acquirer and the Target as This rapid growth in online well as detailed information regarding the transaction and its sales has pushed upwards demand for industrial real estate. As process. Once the Offer Document is approved by the Capital a result, there has been rapid growth in rental rates for prime Markets Authority (CMA), the Target’s board of directors is to warehousing space: average rental rates grew by 9.9% year- give a recommendation about the presented offer based on on-year for 2015. Furthermore, the growth rate is even higher a report prepared by an independent investment advisor. The around import gateways and population centers (Source: Wall board’s recommendation does not in any way interfere with the Street Journal). Prime industrial properties currently command progress of the transaction, but is rather used as a guidance to on average a rental rate of US$ 5.3 per sqft per year on a NNN assist shareholders in deciding whether the offer is fair or not. basis (Source: Cushman Wakefield). Once the subscription period begins, any interested shareholder David Egan, head of Commercial Real Estate Services’ at can decide to participate. CBRE industrial and logistics research in the United States said: Competing offers can be submitted to the Target. The party “There are huge premiums being placed right now on being close who had first presented an offer is given a chance to submit a to the consumer - speed of service, speed of delivery is a critical revised offer. If a revised offer is submitted by the initial party, component of why people choose to buy from one retailer over the party who had another.” He added: The CMA released new submitted a com- The rapid growth in online sales “to get the goods to regulations to make Voluntary peting offer can also consumers fast, you present a revised of- has pushed upwards demand for have to get close to Tender Offers more efficient than fer. The Target’s an- industrial real estate them.” Oakland Cal- before nual general meeting ifornia recorded the (AGM) is to decide highest rental growth rates, with rents increasing at 29.8% on which offer is fair between the two. year-on-year; CBRE expects the rental rates in prime markets An example of a recent transaction with competing offers is: such as Oakland to increase by 6% in 2016. Nafais Holding. Boubyan Petrochemical Company had originally Due to significant demand pressures, the vacancy rate for submitted a voluntary tender offer to acquire Nafais Holding. industrial properties has declined sharply: the nationwide Gulf Friends Real Estate Co., a competing bidder, subsequently vacancy rate for Q1 2016 stood at 6.2%, a 16 year record low. submitted a competing offer; this led to Boubyan Petrochemical Even with an estimated 131 million sqft of construction coming to revise its offer upwards. When Nafais’ AGM took place, the online in 2016, Jones Lang LaSalle (JLL) estimates that absorp- shareholders’ selected to move forward with Boubyan Petro- tion will continue to be strong and that vacancy rates will stay chemical’s revised offer for the voluntary tender offer. around the low-6% mark. Net absorption rates averaged 56.1 The CMA through releasing its new executive regulations, million sqft per quarter since 2014, and it has been positive has made voluntary tender offers more efficient than before. for 24 straight quarters. Under the new executive regulations, the only material differ- As an example, consider the impact of e-commerce on the ence relative to the mandatory tender offers framework is the Northeast region: as e-commerce focuses on same day pack- price offered. In the previous executive regulations, voluntary age delivery, developments around high density areas such tender offers required the Target’s and Acquirer’s extraordinary as New York have become critical. Lehigh valley submarket general meeting (EGM) to decide on whether the offer price in Pennsylvania has seen 56 million sqft of new warehouse was acceptable. This prolonged the duration of the transaction space added since 2010, increasing the size of the market by and made transactions less attractive to potential acquirers. 25%. Fedex Ground acquired its largest facility in the country, Going forward, more voluntary tender offers are expected to a 800,000 sqft automated distribution center in Allen Town, PA be witnessed in the market. to further support the ever growing demand of the e-commerce industry. The same trends are being witnessed nationwide, especially in gateway markets and high-density areas. This potentially serves as a proxy for future trends in fast growing cities across the globe.
12 GETTING TO BUSINESS Searching for yield By: Khaled Al Sabah Stocks and bonds appear to have gone through something of a role reversal in 2016
Just like past years, 2016 started with many serious risks; oil, deflation, US reces- sion, China meltdown, a crunch in global credit markets and Brexit. Fast forward to today, the psychology in markets has drastically improved thanks to better than expected eco- nomic data and mainly due to excessively bearish forecasts. The rate of global growth has been above expectations but it has not accelerated much. Equity markets have continued to rally and the search for yield continues in full force. Equities have now fully recovered their Brexit losses – the S&P 500 is trading at new all-time highs and MSCI EM is at a YTD high. In Europe, despite Brexit, FTSE 100 has been one of the best performers YTD. Global bond yields remain near all-time lows across markets – Italian and Spanish 10-year yields are close to 1%, German and Japanese 10-year yields are negative and the UK 10-year yields dropped from 1.5% at the beginning of June to less than 70 bps right now. While for most of this year, Japan has been the key driver of global bond yields, since the Brexit vote the UK bond market has been the key driver of lower as bond yields remain anchored and growth remains stable but Around a third of all developed- global bond yields. still beats somewhat bearish expectations might keep equities country government debt—more Stocks and bonds rallying to new highs. appear to have gone If you were to buy, at random, any government bond, there than $7 trillion—is now trading through something is a one in three chance you’d lose money if you held onto it at negative yields of a role reversal this until it matured. That is, around a third of all developed-country year. Bonds have government debt—or more than $7 trillion, in terms of market been a great source of price appreciation, led by the 17% YTD value—is now trading at negative yields, according to Citi. return on the 30-year Treasury. But as yields have flirted with That means that investors are effectively paying borrowers to all-time lows, the income has been declining. In fact, stocks lend to them. have arguably been a better source of income. At the end of We are neutral on all major asset classes. Within equities we July, the dividend yield on 65% of the stocks in the S&P 500 prefer Emerging Markets due to growth expectations and valu- exceeded the yield on the 10-year Treasury. We believe the main ations. We also like investment grade credit and hold positions reason why stocks keep rising is that investors are searching in precious metals since the beginning of the year. for yield. Investors are looking at some stocks as sources of income but must be reminded of the extra price risk and volatility Maturity (Years) of returns with stocks. Switzerland Monetary policy easing in both Europe and Japan have been Japan big contributors to the broad-based decline in bond yields. Germany The bank of Japan moved to negative rates in January. In the Austria Netherlands spring, the European Central Bank stepped up its monthly as- Finland set purchases to £80 billion from £60 billion and expanded the France purchases to include corporate bonds. The Bank of England Belgium recently announced its own corporate bond purchase program. Denmark More than 25% of government and corporate bonds in devel- Sweden oped countries now have negative yields. Those negative yields Spain are almost entirely outside the US. In fact, the US is home to Italy U.K. about 45% of the world’s bonds that have positive yields. The Norway relatively attractive yields have drawn foreign money into US U.S. bonds, government, corporate and even municipals. The global 0 1 2 3 4 5 6 7 8 9 10 search for income will probably keep bond yields from rising Positive Negative materially soon. The continuation of the current search for yield Sources: BlackRock Investment Institute, Thomson Reuters, as of May 10, 2016.
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GETTING TO BUSINESS Marmore Bulletin: Introducing the far-reaching extension of our research arm By: Sudhakaran Jampala
If you’re a colleague at Markaz, I trust that you’re fully aware that Marmore MENA Intelligence is the research subsidiary of Markaz, based in Chennai, India. However, the story of “Marmore Bulletin” and how it has extended its reach to decision makers is probably what you wonder about when you see the quarterly publication in the business lounges at Kuwait Airport or when you see the head of Kuwait Direct Investment Promotion Authority (KDIPA) on the cover. Marmore has carved a re- Bulletin will not only gain well portant market developments gional niche for itself in terms categorized and reusable mar- that transpired in the previous of research and knowledge ket knowledge, but will carry quarter–including research services. Part of Marmore’s and analysis on appeal is timely and evi- Mamore’s quest to combine the trends that un- dence-based research that is derpinned market packaged in a visually appeal- smart content design has developments. The ing fashion. The company’s resulted in a rich source for pride of place in quarterly publication, “Mar- market intelligence, expert the Marmore Bul- more Bulletin,” is an illustrative opinions, timely data and usable letin goes to the example of the capabilities Featured Interview and reach of the company that market research section, which fea- produces it. tures the thoughts Mamore’s quest to com- strong associations of the and opinions of leading per- bine smart content design with Marmore brand with quality sonnel in government and an impactful brand building and reliability. industry. Functioning as a exercise has resulted in the The Marmore Bulletin fol- thought leadership platform, Marmore Bulletin becoming lows a standard structure the signature Marmore Bulletin a rich source for market in- across each of its releas- sections charts new territories telligence, expert opinions, es. The Bulletin opens with in strategic communications timely data and usable market a Foreword, which typically in terms of thought leaders research. Readers of Marmore addresses the critical themes explaining their organizations, and topics of the day. The policies and programs. The Foreword sets the Featured Interview section is pace for what to a place for discussing ideas expect in the rest that can influence the world of the publication, in positive ways. The Feature with special em- Interview Section has featured phasis on catering to luminaries such as Sheikh Dr. the knowledge needs Meshaal Jaber Al-Ahmad of senior leadership in Al Sabah (Director Gener- the private sector, public al, Kuwait Direct Investment sector and other influen- Promotion Authority) in the tial institutions. latest edition. Readers can The Foreword is followed build key knowledge and in- by a thematic presentation formation connections from of the quarterly review of the section, which will serve capital markets in the Mena well in situations of critical region. A look at this section decision-making. will give the busy executive Following the Featured In- with a snapshot of the im- terview section is the Expert
14 GETTING TO BUSINESS KYC: Our first line of defense against unfavorable risk By: Fay Al-Mukaimi
uments and this applies to all persons authorized to sign the account opening forms. Second, we must identify the client’s ownership and control structure. Third, we must verify the identities of the underlying beneficiaries and persons in control of the account. Fourth, we must obtain information about the objectives of the account based on the type of cli- ent, business, and transactions so as to conduct the due diligence on the client on a continuous manner. And last, we must ensure implementation of ongoing due diligence process on the client such as Opinion piece, in which an expert in a Understanding the circumstances of continuous review of all transactions and particular area discusses a topic, theme our clients and the nature of their activities accounts during the period of business or knowledge area. The contents of the is an essential part of client due diligence. relationship to ensure that all transactions Expert Opinion section will encourage Gathering as much information as pos- are consistent with information available readers to think broadly about approach- sible enables us to understand the risks with us. ing a topic, while providing real-world that the client poses to our organization. examples to facilitate understanding This risk based approach is the first line on complex business or policy chal- of defense against money launderers and Knowing our clients is an lenges. Examples from the past include the client due diligence process must ongoing responsibility and the Mr. Walid Mourad (Portfolio Manager, be completed on all clients prior to the process includes facing some Lazard Asset Management) sharing start of any business relationship. Risk challenges his views on impact of decline in oil based approach helps identify high risk prices on asset management industry areas, develop strategies to mitigate these and equity markets; and Mr. Bassam Al risks and focus resources on such areas Knowing our clients is an ongoing Othman (Executive Vice President, Real deemed high risk from a financial crime responsibility and the process includes Estate MENA of Kuwait Financial Centre perspective. If we do not implement a facing some challenges. One challenge ‘Markaz’) sharing thoughts on the trends risk-based approach, the organization is dealing with clients who refuse to shaping the Real Estate market in Ku- could poten- respond with wait. The Marmore Research Highlights tially suffer us. For ex- section then follows. Some of Marmore’s significant ample, some research outputs are skimmed for inno- financial and may not be vative content and presented for easily reputational comfortable digestible reading of the audience. For damage. with filling those interested, there is always the op- We at Pri- out mandat- tion of gaining a full copy of the specific vate Banking ed FATCA Marmore research study whose content Department forms since has been presented as snippets. (PBD) use they choose Rounding off the Marmore Bulletin our best ef- to be more is the section called MENA Data at a for t when Client discreet Glance. This section is a collation of opening and about hav- updated data points spanning economic maintaining ing another indicators, social indicators, industry accounts to nationality. data and international country rankings. establish es- Because we The busy executive or policy maker can sential facts of each client. We also strive deal with high net worth individuals, we benefit from the section by using it as to know detailed information about our approach these challenges in a very a dashboard for tracking progress in client’s risk tolerance, investment knowl- careful and delicate manner. In the end, rankings or checking the latest indicator edge, and their financial position. the PBD team fulfills its responsibility in values to base decisions upon. The procedure for the collection of KYC understanding our clients’ requirements (Know Your Client) documents comes in and advising suitable investment products several steps. First, we must verify the and services to them. identity of the client using original doc-
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GETTING TO BUSINESS Markaz 2016 TV campaign celebrates prominent Kuwaiti scientific figure Markaz launched during Ramadan 2016 one of its most successful televised commercial campaigns. It featured the story of prominent Kuwaiti astronomer, Dr. Saleh M. Al-Ojairy. Using world-class cinematic techniques to produce visually stunning scenes, the com- mercial narrates Dr. Al-Ojairy’s story starting from his curiosity as a child with natural phenomena which led him to scientific research. The commercial then demonstrate his dedication and persistence which have propelled him to be the first astronomer in Kuwait and the GCC region, and positioned him to be one of the most trusted voices in his field.
The Media and Communication team worked with Doors Production to produce the advertisement. The making of the commercial took more than 3 months and the scenes were shot in 4 different locations in Kuwait and the final product was aired in Alrai TV, MBC and KTV. The commercial now continues to air in CNBC Arabia and Al-Arabiya. The campaign was highly applauded by our audience and industry critiques as evident of the high interaction in social media, newspaper coverage and awards it has received. Please let us know what you thought of the commercial. Visit our Youtube channel www.youtube.com/user/MarkazVideos and share with us your ideas about how the Markaz brand should carry on to maintain its position as the most trusted fi- nancial institution in the investment sector.
16 GETTING TO BUSINESS HRAD & expert coach complete coaching journey with select employees The coaching program of HRAD’s talent management initiative This program paved a path for each of these participants in developing their has concluded in third quarter of 2016, the selected participants skills and abilities and unlocks their po- had to go through an initial Cognitive and Psychometric evalua- tential to boost performance and achieve tion exercise to analyze and define the competency gaps at the greater results both in their personal and individual level. professions lives in the years to come. Human Resources & Administration Based on the testing results, a certified Plans for these employees. The coach department will continue with their expert coach from Ernst & Young (EY) con- then conducted follow up sessions with initiative of employee development to ducted individual coaching session with each of the eight participants to track strengthen and align position require- the participants to agree upon learning progress and make amendments where ments to meet Markaz business strategy and development interventions, preferred necessary, providing them techniques, and objectives. learning styles, set key success indicators strategies and relevant tools to ensure a Some of our colleagues have provided and formalized Individual Development path of continuous improvement. us with their testaments:
Deena Alrefai Alrazi Albudaiwi Khaled Almubariki Investors Relations Media & Communications MENA Real Estate The EY coaching helped me gain perspec- The EY coaching program helped me deep- The leadership program spotted the im- tive on my personal blind spots and how en my understanding of myself and of the provement areas of its attendees and others perceive me. The Coach provided unique opportunities and challenges that worked on enhancing each person to me with techniques and strategic pointers could arise in my surroundings because of reduce the effect of it. For instance, from to better manage and interact with my team my character attributes; This self-awareness my personal experience of the program, I members, and helped me personally as well. has already enabled me to better under- started to know the areas which I need to We worked on several key issues and the stand how I could employ my capabilities improve and the ways that I should improve coaching was hands on with assignments more efficiently in the work place and ensure them which were implemented during the and feedback to assess my progress and that I interact with my work environment in program; therefore, I started to work on my gain awareness of my new habits. the best possible way to achieve the best improvement areas. Subsequently, I and results. What I have learned during my some of the people close to me started coaching journey was mainly about myself noticing significant improvement. In order The Coach provided techniques and how I could maximize the value I add to to continue this journey, I will follow on the and strategies to better manage the organization. Unlike abstract business advices and tips given to me to make sure and interact with my team theories and classic workplace case studies that all shortcomings are not barriers but which could go outdated, what I gained actual opportunities for success. members, and helped me through my coaching journey could be personally as well used as a sustainable tool for continuous improvement.
Markaz new employees
Ahmad Hayat Syam Kumar Assistant Analyst Vice President Advisory Information Technology Welcome! 17 engage Q3.2016
LAWS & REGULATIONS Client complaint management Customer service is a key focus and one of the most important factors in developing our business By: Anu Abraham
At Markaz, the management of complaints is delegated to responsible departments based on the category of the complaint.
Type of Complaint Responsible Department Client complaints Complaints Cell Investor (shareholder) complaints Board Secretariat Whistleblowing complaints Whistleblowing Officer Employment related complaints HRAD All other external and internal complaints Risk Management
Client Complaints resolved fairly. CMA regulations require Cell to manage client complaints. The Customer service is a key focus area all client-interfacing employees to be unit comprising of the designated mem- as satisfied clients are one of the most aware of the procedures for handling bers of the Compliance and Legal De- important factors in developing our busi- client complaints. partments, reports to the Chief Exec- ness. By talking back to us when they utive Officer. Markaz has a detailed believe they have not received our com- By talking to us when they policy and procedures manual on the mitment, clients give us an opportunity believe they have not received management of client Complaints, in to correct the immediate problem and addition to separate policies on each restore goodwill. Research shows that our commitment, clients give category of complaints. All complaints clients who complain about products and us an opportunity to correct the are investigated and resolved within the services continue to frequent the busi- problem and restore goodwill prescribed time and the resolution is ness and buy the products they complain reported to Management and the Board about if they believe the complaint was Markaz has a dedicated Complaints Audit Committee.
Important guidelines ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
1 employee can accept 2 3 4 Complaint and acknowledge the forms are complaint. In case Any client The The available on the client wishes to complaints Complaints Com- the counter talk or meet with the which are accepted Cell plaints Cell also and our website. Any responsible official, need to be immediately conducts a thorough arranges to notify the form of complaint they are to be directed reported to the investigation and agrees Complainant within such as verbal, written to the Complaints Cell Complaints Cell. on the action required 30 days from when and electronic can located at the first floor with the concerned corrective action has be accepted. Any of Universal Tower. departments. been taken.
18 PERSONAL INTEREST Toastmasters: Develop your communication & leadership skills for as long as you wish By: Sunil Kumar Singh
Since individuals join with their banquets and other occasions. The first own unique goals, they are able meeting was held at the YMCA building on October 22, 1924. Currently, organization to continue to develop their has more than 345,000 memberships communication and leadership from 15,900 clubs in 142 countries. skills for as long as they wish In Kuwait, first toastmaster activity took place in Jabriya by an American The opportunities for growth are unlim- Language teacher Kim Lane in 1998. DTM ited. Since individuals join with their own (Distinguished Toastmaster) Abdullah unique goals and needs for improvement, Mehadi happened to attend the event. they are able to continue to develop their He describes it very emotionally that he communication and leadership skills for fell in love with Toastmasters activities. as long as they wish, and many members DTM Abdulla was so excited with the Joining Toastmasters allows continue in the program throughout their idea of toastmasters that he devoted his Men, Women and Children to lives. huge Diwaniya in his Rumaitiya Villa for By regularly giving speeches, gaining toastmasters and human resources train- build the skills they need to feedback, leading teams and guiding oth- ing activities and named it SPCL. Later become more confident public ers to achieve their goals in a supportive DTM Abdulla, DTM Don Prades and DTM speakers and stronger leaders atmosphere, leaders emerge from the Musaddik Peshimam and others joined Toastmasters program. Thousands of hands to register Kuwait’s first Toastmas- in every area of their lives. Toastmasters have become professional ter Club, Kuwait Toastmaster Club in 1999. speakers earning a living as a speaker, Now, there are 30 English Speaking and Toastmasters offer a proven education trainer, facilitator, consultant or coach. 25 Arabic Speaking Toastmasters clubs program that comprises two tracks: Com- Journey of Toastmasters was started in Kuwait; out of which, 22 toastmaster munication and Leadership. The program by Ralph C. Smedley, an American who clubs and 3 gavel (Toastmaster clubs allows members to choose one track or decided to organize a club where men for kids) clubs are running from SPCL, both, and each features a series of proj- and women could learn speaking and Rumaithiya. ects that can be completed at one’s own leadership skills in a social environment. If you want to know more about pace. Members also have the flexibility Smedly named the group as Toastmasters Toastmasters, please visit their website to work through each track separately Club. Toastmaster was a popular term that www.toastmasters.org or contact me or both at the same time. referred to a person who gave toasts at through my email [email protected].
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