Two items have proved absolutely indispensable for Richard Teng in the course of 2016: his passport and his pen.
The chief executive of the Abu Dhabi Global Market’s regulator has clocked up thousands of miles in air travel in the 10 months or so since he declared the capital’s new financial free zone “open for business”, and has signed agreements with partners around the world as it seeks to establish itself as the “go to” hub for financial services in the region.
The latest deal, signed yesterday with the Financial Services Board of South Africa, is the 24th such agreement Mr Teng has finalised, and the pace shows no sign of slacking for the remainder of the year.
He has been in charge of the ADGM Financial Services Regulatory Authority for the past 18 months, and in that time has overseen the market’s transition from “launch” to “fully operational” mode.
In a rare interview, he explains the process: “It has been a two-phase strategy: first, building strong domestic alliances in Abu Dhabi. We needed buy-in and support from the rest of AD to help us become an international financial centre, and this has come from the sovereign wealth funds, the local financial institutions and the authorities. Now we have strong domestic buy-in and support.
“That gave us a platform for building a network of international alliances, and we’ve been very busy there. In less than a year we’ve been admitted to the three main international organisations in the financial world and signed memorandums of understanding and other agreements and deals with lots of other bodies,” he says.
The most recent flurry of international activity was in China, where Mr Teng clinched deals last month with regulators and authorities in Shanghai and Beijing. Given his background in Singapore financial services and his fluent Chinese, it’s not surprising that the focus has been eastward, and more visits are planned later this year.
“Some people say Chinese growth is slowing, but it’s still faster than most other places in the world and I don’t think there will be any ‘hard landing’. In one of our target areas – high-net-worth individuals – it has the fastest growth rate in the world. There has been an annual 30 per cent increase in the number of HNWIs and a growing number of them looks to invest outside China,” Mr Teng says.
The expanding links with China look to be a keystone of ADGM’s strategy. “China is important for the UAE and Abu Dhabi because of the strategy the Chinese are pursuing in the region. We believe we can become an important hub for China, with whom we already have a deep-rooted and very strong relationship,” he says.
He reels off a list of examples in the form of official visits by UAE politicians and multibillion-dollar deals between the countries as China pursues its strategy of growing trade and economic links with central and south Asia, the Middle East and Africa – the “one belt, one road” strategy.
“I’m off to China again later this month for a financial conference in Beijing, along with Rashid Al Baloushi [the chief executive of the Abu Dhabi Securities Exchange, ADX]. It will be a great opportunity to explore possibilities in the “one belt one road” field as well as general investment possibilities in Abu Dhabi,” Mr Teng says.
“Then, in October, we’ll be visiting some of the great cities of the traditional Silk Route, again with ADX this time accompanied by a very big Chinese private bank. And before the end of the year there will be a delegation of big asset managers from China coming to Abu Dhabi,” he says.
Although the China focus is significant, ADGM is conscious of its ambitions to be a global market, and the rest of the world has not been neglected. A visit, again in partnership with ADX, to the United States in May was an opportunity to explain the strategy to big American investors on Wall Street and to make new alliances in the financial technology (fintech) space, which has been one of ADGM’s special initiatives.
“The Americans were very interested in the ADGM value proposition. Even as some US banks are reducing their global footprint, they are still interested in the potential in other markets that offer value, like us. And the west coast is a global hub for fintech,” he says.
Europe, too, has attracted ADGM’s attention, with agreements signed with authorities in Paris, Luxembourg and Jersey, as well as with international organisations based in Basel, Switzerland. Mr Teng is aware that the Brexit referendum had caused some uncertainty – and some opportunities – in Europe. “The vote will cause volatility and adjustment in the short term, and will impact the EU. But I think many financial institutions will wait and see. I believe there could be opportunities for ADGM in London. We are having discussions with London institutions, especially in the fintech sector,” he says.
One theme of the year so far has been the growing relationship with ADX, which was cemented with an MoU last month agreeing to explore the possibility of establishing a trading market in ADGM’s Al Maryah Island free zone. “I think it’s important to have a market of some kind, though it’s too early to comment on what kind of market it will be. But we’re looking to develop products and services, with a view ultimately to setting up an exchange. The goal is to add liquidity to the UAE markets, not take it away from ADX.
“So along with ADX we’re looking at ways to add liquidity in an exchange that will also add to the diversity of ADGM. We probably have sufficient expertise ourselves to set this up with ADX but we can enter into international alliances with market operators if we think it’s appropriate,” he says.
ADGM’s steady growth will get a boost towards the end of the year, when UK financial group Aberdeen Asset Management opens up in the capital with some fanfare. “Aberdeen picked ADGM specifically because we’re more modern and streamlined than other centres and we have the support of key AD stakeholders in what we do,” says Mr Teng, who hints at other imminent entrants to the market in real estate and Indian asset management.
Some observers have questioned the slow, careful pace of ADGM’s launch period, against the background of a tighter fiscal situation in the UAE capital. But Mr Teng shows no signs of impatience or frustration. “We’ve been pretty fast actually in developing credibility and standing among the international community. We were also very fast on fintech. I’m very happy with the progress we’re made,” he says.
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