As we look back at the last six months in 2014, the UAE and world has seen a number of social, political and economic reforms. With the Expo 2020 win, promoting and boosting sector growth in the UAE; to the recent stock market epidemic due to the Arabtec stock collapse; the world cup adds to the economy of Brazil and the recent governmental elections which took place in India, resulting in one of the largest elections in Asia – it is astounding that these events which altered, shaped or changed economies took place during the first half of this year bringing positive change and lessons.
When looking at the above in depth, it becomes clear that change can occur overnight which has the ability to impact people, the community and businesses within it. Look at the Expo 2020 win, which changed the UAE market instantly, the real estate & construction and leisure & hospitality sectors boomed overnight with new developments being announced, the housing market returning to full steam and new infrastructure developments being launched. This further restored confidence and as a result the economy continues to grow in line with the expectations of delivering a memorable event in 2020.
Then we move onto more recent events which left the stock market in turmoil and created big news for the Dubai Financial Market (DIF) when Arabtec’s share price collapsed. The Dubai index slid 4.38 percent to a three-month closing low of 3,943 points, bringing its losses from a multi-year peak hit in May to 27 percent. Dubai's drop also dampened the market in neighbouring Abu Dhabi, which slid by 2.1 percent at the close of trade on the 30th of June. Shares in Arabtec, dropped by more than 50 percent in six weeks, closing at AED2.61, sending the stock market into turmoil and creating a ripple effect on other stocks related to the construction industry, with Union Properties, Drake & Scull International also closing weaker.
This indicated that the Dubai stock market should not be reliant on one company alone, the fact that the share price collapse of Arabtec rippled to Abu Dhabi and other real estate and construction companies, further highlights that this should not be taken lightly. Why has one company been given so much rein to almost bring down the stock market? The Dubai Financial Market should remain independent to ensure sustainable growth both now and in the future and further enhance resilience should something similar occur again.
We then look at other events which have created change across the world. Many of you would have been engaged with the World Cup which took place in Brazil, the coverage of the sporting event has been positive for Brazil but what has this meant for the economy? Brazilian business enthusiasm for hosting the tournament has been positive. However, while few business leaders predict increased investment or increased profits as a result of Brazil hosting the competition, there is hope that infrastructure improvements and a greater influx of tourists will create a stronger economy which will benefit the businesses and people of Brazil.
The infrastructure investments required to get the country ready to receive the 600,000 visitors this summer - not to mention those coming for the Olympic Games in 2016 - will boost the long-term growth prospects of the economy. With the World cup due to conclude next month, I believe that this event will leave a legacy in Brazil for years to come.
When it comes to political reform, no place saw greater change than India. Over 800 million Indians gathered at polling stations to vote for change – and change is what occurred. This saw India elect a new prime minister, with Narendra Modi replacing Manmohan Singh as the new prime minister of India. He has promised to change India and bring back the thriving economy like done for Gujarat (state of India). This change will impact the business environment of India and has already begun to further strengthen the economy that was once weakening as a result of political uncertainty. Although new to seat, Modi’s passion, drive and ambition has been commented on around the globe. I think this change will be good for India if managed in the correct way, the people have spoken and as a result, the economy should too.
At Grant Thornton, we have continued to advise dynamic clients who have an instinct for growth. A number of our clients have experienced continued growth, which is comforting to see – it’s only right that as the economy grows, businesses and people do too.
As a business, we moved to the Rolex Tower in January of this year which marked a new chapter for our firm and growth ambitions. We value our client relationships and believe that nothing is more important than servicing our clients in an efficient and exceptional manner. Therefore, being closer to them and providing an agile and distinct service to our clients is key.
Earlier this year, the Managing Partners' Forum, a professional body that celebrates the value of leadership and management excellence, named Grant Thornton 'Best managed international firm.' Judged by an independent panel of subject matter experts, the award recognised the strength of Grant Thornton’s global strategy and leadership, which has enabled Grant Thornton to lead the major global accounting networks in revenue growth the last two years.
The judging panel said, "Grant Thornton is faced with the formidable competition of the Big 4 accounting firms but has developed an ambitious five year strategy across 127 countries, with a view to both growing revenues and enhancing its reputation. In a difficult market the firm has achieved very significant levels of growth, a level of international co-ordination and integration and has now positioned itself as a strong and credible challenger brand in a very consolidated market."
Considering the above and when heading into the latter part of the year, it is evident that 2014 is turning out to be an eventful year in terms of social, political and economic reform. We have seen a steady increase in business optimism over the past two years in the UAE with confidence rocketing bringing buoyant sector growth. 2014 has so far been the year of change and opportunity which should be embraced and capitalised upon.
Dubai bourse turmoil as Arabtec, others sink by daily limits, 30 June 2014. Accessed via http://www.arabianbusiness.com/dubai-bourse-turmoil-as-arabtec-others-sink-by-daily-limits-556126.html