LONDON // The publisher Condé Nast has not always considered the Arab world “en vogue”.

About 10 years ago, the US media major strongly ruled out licensing an edition of its flagship fashion title on these shores.

But Condé Nast now says there is a solid case for publishing a regional version of its Anna Wintour-edited US Vogue – and possibly other magazines such as GQ, Wired and Glamour – in what it describes as a “thriving” Arabian Gulf market.

Its international arm this month announced it had reached a licensing agreement with the Dubai-based Nervora, the publisher of Condé Nast’s Style.com/Arabia fashion website, to produce Vogue Arabia.

Deena Aljuhani Abdulaziz, a Middle East fashion guru who married into the Saudi royal family, has been appointed editor in chief, with the Style.com/Arabia website – currently published in English and Arabic – to be rebranded Vogue Arabia this autumn, and a printed edition of the fashion title set to follow in spring.

“There has been a growing demand for Vogue in the region. We hear it from our advertisers, who see the Arabian Gulf as a key market,” said Jonathan Newhouse, the chairman and chief executive of Condé Nast International.

That is certainly a change of tone from an email reportedly sent by Mr Newhouse in 2007, in which he vehemently rejected the idea of a Middle East version of Vogue. The executive reportedly wrote that the Middle East was too violent, and that it was incompatible with Vogue given a “powerful fundamentalist, religious element that rejects western values”.

Strong words indeed. So what has changed?

Mr Newhouse puts it down to both a makeover in the Gulf’s fashion culture and his own company’s growing experience of the market.

“Nine years ago the Arabian Gulf did not possess the deep interest in fashion and the range of shopping centres and designer stores that are present today,” he said in response to a question about his 2007 email.

“Moreover, we as a company did not have any experience publishing in the region. Since then, we have launched through a licensee two brands, Conde Nast Traveller and AD, which is devoted to architecture and home decoration. Success with these brands gave our company the experience and deeper understanding of the market, which gave us the confidence to start Vogue Arabia.”

The growing presence of haute couture in the malls and boutiques of the Gulf has been matched by increasing interest from regional investors in global fashion brands.

Two major deals emerged last month: the Gulf investment firm Investcorp said it bought a majority stake in the Italian menswear company Corneliani, while the Qatari fund Mayhoola for Investments agreed to buy the French fashion house Balmain.

But the arrival of Vogue Arabia also comes at a time of a global slowdown in the personal luxury goods market, as well as economic uncertainty in the Gulf given the lower oil prices.

Mr Newhouse said these are merely “short-term and transitory” trends.

“We don’t make long-term business decisions based on the price of crude,” he said. “The Arabian Gulf region is thriving, with a growing segment of the population who are deeply interested in fashion. We make decisions based on these long-term considerations.”

Shashi Menon, the chief executive of Nervora, said there had been an incredible response to the announcement about the launch of Vogue Arabia.

“The region has been waiting for it for quite some time. There is just a lot of pent-up excitement for what Vogue can do for the region,” he said.

Mr Menon said his company’s mission with Vogue Arabia is both commercial and cultural, in terms of being a bridge between East and West.

“Over the past few years, the Middle East has really been in the process of an ongoing transition to emerge as more than just a consumer market for fashion. To not just be a place where people go and shop, but rather a culture and a place that can create,” Mr Menon said.

The Dubai publisher acknowledged that there had been a slowdown in the growth of luxury retail, partly because of the decline in tourism from Russia and China. But he added that this might actually strengthen Vogue’s appeal with advertisers.

“Certainly, Vogue is more sheltered than other brands,” Mr Menon said. “When markets get tight, brands spend more time thinking about where they want to prioritise and consolidate their budgets in the fashion and luxury space. More often than not, that happens to be Vogue as a publication.”

Given that Condé Nast is now making its long-awaited move to launch Vogue in the Arab world, could more of its publications follow – such as the men’s magazine GQ, or technology title Wired?

Karina Dobrotvorskaya, the president of Condé Nast International’s new markets and brand-development division, said this could be on the cards.

“We do believe in the Arabian market. There is a huge appetite for quality media – as well as for great luxury, fashion, beauty and technology content,” she said.

“So we do not rule out the possibility of launching GQ, Wired or Glamour, but we would love to establish our flagship title – Vogue – first. As soon as it is done, we will be ready to discuss our future expansion.”

So it seems the Arab world is very much in fashion at Condé Nast – and it is a trend that could continue for seasons to come.

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UAE start-ups on the ground benefit from power of the cloud

Cloud computing may sound ethereal – but for many of the UAE’s smartest of start-ups, it’s bringing some very real benefits on the ground.

Many of us use the cloud every day without even thinking about it – like when you check your Gmail or stream the latest tracks on Apple Music.

But the cloud’s vast computing power is also forming the backbone of some of the UAE’s most high-tech businesses.

Take TeachMeNow.com, founded in late 2013, which is a “virtual classroom” where teachers can earn money by giving one-to-one video tutorials.

Though the company is based in Dubai, the first live class it hosted involved a professor in Venezuela and a student in Saudi Arabia.

Thea Myhrvold, the founder and chief executive of TeachMeNow, says using the cloud brought several benefits. The company did not have to buy expensive hardware such as servers; connections between students and teachers are faster because of the cloud’s global network; and the service works in a web browser, without the need for an app.

Ms Myhrvold also says the cloud platform means her business can scale up without investing in new hardware. “You can have a global reach faster, with less cost,” she says. “We could have a million users tomorrow and our system wouldn’t crash.”

TeachMeNow hosts teachers specialising in subjects ranging from art to Arabic and chemistry to chess. Teachers set their own hourly rate, with the website taking a 15 per cent cut; the company also offers a white-labelled version that can be used by institutions looking to sell online classes.

Cloud services do, of course, come at a cost. But TeachMeNow has temporarily sidestepped this expense by signing up to a Microsoft initiative called BizSpark, which offers start-ups a limited amount of free software, technical support and cloud services over three years. The company later qualified for the BizSpark Plus programme, which offers up to US$120,000 of cloud over one year.

“We have saved quite a few thousand dollars already. And as a start-up, every cent counts,” says Ms Myhrvold.

Other tech giants have similar schemes aimed at start-ups, such as Amazon Web Services’ AWS Activate and the Google Cloud Platform for Startups. A Google representative in the UAE says members of the AstroLabs Dubai co-working space can get a free trial of the Google Cloud Platform but he says that start-up credits are not available in this market.

Michael Mansour, the chief innovation officer at Microsoft Gulf, says more than 100,000 start-ups worldwide are using the free BizSpark programme – he says that hundreds of them are in the Arabian Gulf.

“We have the greatest activity here in the UAE across all the Gulf countries. But we are seeing activity in Oman, in Kuwait, in Qatar, in Bahrain,” he says. “If you are starting a company, you don’t want the additional cost of software and hardware. We’re all coming to the realisation that cloud is a cost-reducer.”

Mr Mansour acknowledges that the cloud “can be misunderstood”. A study in 2014 by Microsoft Canada found that 90 per cent of senior executives in Canadia are not familiar with what cloud computing means. Almost half felt their company’s information would be unsafe in the cloud – even though, according to Microsoft Canada, the multiple backups of data made by cloud services “keeps it safe from fires, floods or malicious damage that could strike on-premise servers”.

Mr Mansour says the cloud has advantages in terms of reducing capital expenditure and enabling applications that rely on heavy processing or big data, such as artificial intelligence and the internet of things.

KinTrans, another Dubai-based start-up, relies on a lot of data-crunching. It has developed software that translates physical sign language, which is analysed using a Microsoft Kinect motion-sensing device, into voice and text, enabling communication between the hearing and the deaf.

KinTrans is currently perfecting its technology and plans to start licensing out its software later this year, says Catherine Bentley, its co-founder and chief business development officer. She says the company had also taken advantage of the offer of free Azure cloud and software services from Microsoft.

“The data processing happens in the cloud. It keeps the on-earth operations really easy and really accessible for businesses,” says Ms Bentley.

“The Azure cloud is also going to be the way that we commercialise. So as a business-to-business model, and licensing base, we can be everywhere and only one place at the same time.”

But while Microsoft, Amazon and Google are all keen to offer deals on cloud and software services to start-ups, they are not charities. As Ms Bentley says, KinTrans will probably become a paying customer of Microsoft cloud services in the future. “They’re feeding their pipeline,” she says.

And given the rise in cloud computing usage, there have been some concerns raised about security. “Just because we can’t touch it, doesn’t mean it’s any more secure or less secure than any other device that we use,” says Ms Bentley.

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A luxury label is a must-have this summer for Gulf investors

LONDON // Arabian Gulf investors have been out on a shopping spree for luxury fashion brands – and it’s a trend expected to continue for many seasons to come, analysts say.

Two major deals emerged on a single day last month, marking the latest in a string of fashion forays by regional investors.

Luca Solca, the head of luxury goods research at the investment firm Exane BNP Paribas in Switzerland, said “we have just seen the beginning” of such investments from the Gulf – despite a recent slowdown in the global luxury sector.

Bahrain’s Investcorp on June 21 said it had bought a majority stake in the Italian menswear company Corneliani, valuing the group at US$100 million. On the very same day, it emerged that the Qatari fund Mayhoola for Investments had agreed to buy Balmain, the French fashion house powerful enough to lure celebrities such as Beyoncé and Kim Kardashian to its parties.

“Gulf investors have identified fashion and luxury as an area of opportunity,” said Mr Solca.

“I don’t think these are trophy assets. Rather, I see these brands as relatively small. Their acquisition [is] a bet on their potential growth, given appropriate management and resources.”

It is not the first time Investcorp and Mayhoola have ventured onto the catwalk when it comes to their investment strategies.

Investcorp is a former investor in luxury brands such as Tiffany and Gucci and currently has Dainese and Georg Jensen in its portfolio.

Mayhoola – which did not respond to The National’s requests for comment – already owns the Italian label Valentino, which it bought in 2011, and a stake in the British handbag maker Anya Hindmarch.

Other luxury fashion investments from the region include those made by the Qatar Investment Authority through its subsidiary Qatar Holding, the owner of the Harrods and Printemps department stores. Its investments include stakes in Tiffany and LVMH, the French luxury group that owns Louis Vuitton bags and Dior perfume.

Mr Solca sees an opportunity for Gulf investors to build conglomerates out of multiple niche brands in what he describes as a “fragmented” industry.

“Italian luxury, in particular, is very fragmented with many interesting companies. High-profile success stories like Valentino have increased investors’ confidence,” he said. “There is a chance to build conglomerates – as these are few and far apart: LVMH, Richemont, Kering.”

This would seem to be backed up by a report in The Financial Times, which said Mayhoola’s plan is to combine Balmain and Valentino under one umbrella and eventually list the group.

Yet despite the high-profile investments from the Gulf in haute couture, there has been a general slowdown in the personal luxury goods market over the past 18 months.

The management consultancy Bain said in May that the global personal luxury goods market – including leather accessories, fashion, fragrance and cosmetics – was last year worth €253 billion (Dh1.02 trillion) in revenue.

That marked just 1 per cent growth in real terms compared with 2014, something Bain attributed to global challenges such as decreased tourism across Europe, instability in the Middle East and a downturn in China.

“The 2015 slowdown seeped into the first quarter of 2016 with only 1 per cent growth – a trend that is expected to continue throughout the year,” the consultancy noted.

But Hazem Ben-Gacem, the head of corporate investment for Europe at Investcorp, said he expects improvement in the luxury market in the years to come.

“By providing strategic and financial support we have been able to successfully build global and iconic brands and this is exactly the model we intend to replicate with Corneliani,” he said.

“We also see the luxury market, in particular the menswear category, continuing to experience increased growth over the coming years.”

Mr Solca agreed that the time could be right for investing in luxury fashion brands.

“It is never cheap to buy relatively rare assets, but this is possibly a time when it is indeed cheaper,” he said.

“It makes sense for Gulf investors to build a broader business platform beyond energy. Fashion and luxury goods promise long-term relevance.”

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Day in the life: Dubai marketing executive literally hands on with work

Don’t be offended if Mohamed Hammad only pencils you in for a meeting. Each morning, the Dubai-based marketing executive literally sketches out how his day should look. The Egyptian expat, who is the managing director and chief creative officer of the health care marketing agency Benchmark Middle East, says inspiration for ad campaigns often come when he’s at home or out shopping – but rarely when he’s consciously thinking about work. Each idea brings with it a “euphoric moment”, says the 40-year-old, who founded the agency in 2007. Much of his work is for pharmaceutical companies or health-awareness campaigns; he also devised a non-profit campaign featuring “Adel Sukkar”, a fictional Arabic character who offers advice about diabetes. Here Mr Hammed – who lives with his wife Dalia and three children ages 12, 10 and 6 – describes his mission to address the “underserved” market for health care communication.

5.30am

Most days I get up at 5.30am in the morning. I have a personal trainer who comes to me at 6.30am three times a week. He’s always shouting at me when I sleep late and wake up with no energy. So he is the guy pushing my boundaries. We do cardio and boxing.

7.30am

I eat three eggs and one slice of rye bread with peanut butter. In the morning it’s a very quiet time. There’s nobody at home, particularly during term-time when the kids are at school. So this is a very precious moment for me. In creative [work] you don’t sit and say ‘I’m thinking right now’. When your brain is disengaged from the obsession about ideas, then they come. And it’s the most euphoric moment that a creative person feels. I recall every single moment that the ideas came and saw life.

10am

I head to the office. I start with planning, using a pencil and a sketch paper – an A3 sketch pad that is always in my bag. I start drawing how my day should look, and what the things are that I should achieve. I’m fond of infographics … sometimes I colour it. I make my day visible.

12 noon

Midday is the heart of the day, because you start focusing on the operational issues, making sure everything is running smoothly. In an advertising agency you have deliverables every day and I’m very hands-on with my people. I get in touch with the creatives, with the copywriters and the art directors to check their progress. I get involved in the communication strategy – writing scripts for videos and audio – for a campaign or for a launch event. A lot of health problems can be solved by better communication, creative communication that can change people’s behaviour so they can live healthier lives. We do campaigns for the public, for pharmaceutical product launches. However, as a strategy for business growth, we have also been involved in big initiatives that the agency invested in to move the health care industry forward. For example, we initiated [a diabetes campaign to] screen 8,800 people in Dubai Mall. Agencies are usually reactive to clients’ requests or projects. So we are different in being proactive.

2pm

I follow my trainer’s guidelines, so I only eat grilled meat or salmon for lunch, with salad. I love it.

3pm

By now, there is a lot of input from clients. It’s a very critical time of the day with a lot of details, a lot of feedback, a lot of things that I need to revert to our clients or talk to them about. And then I come back to the team and coordinate that.

5pm

Because of the time difference, it’s the time to communicate with teams in other countries. We have people working in Germany and in Egypt.

7pm

I don’t leave the office before 7pm. And sometimes I have a night shift at the agency; it can go until midnight whenever we have launch events. But on a normal day I go straight home in the evening, because I’m always trying to see the kids. I just have a light dinner, maybe a salad or just a slice of grilled steak.

9pm

I spend some time with my wife – maybe we go out walking for an hour and spend some time downstairs in Jumeirah Beach Residence. I sometimes have calls with friends – this is the only time they can catch me.

Midnight

I go to bed. If I have a night shift at the agency I will usually sleep late. But I try to avoid the night shift when I have my personal training in the morning, because I will be killed.

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Islamic banks in London reject Brexit fear

Islamic banks and asset managers based in London have played down the impact of the UK vote to leave the European Union, amid wider fears the move could spell an exodus from the world’s financial capital.

The Brexit result has caused turmoil in the markets, sending the pound to a 31-year low and wiping trillions of dollars off world equities in the immediate aftermath of the June 23 vote.

And on Thursday, four more companies – Aberdeen Fund Managers, Canada Life, Columbia Threadneedle and Global Henderson – suspended withdrawals from property funds amid a rush to the exits.

The pound, meanwhile, was at US$1.30 (Dh4.77) in afternoon trading, down by about 13 per cent from its level before the Brexit result.

The Brexit fallout risks undoing the years of work the UK has spent building its standing as the western hub for Islamic finance. David Cameron, the British prime minister, in 2013 told the World Islamic Economic Forum that he wanted London to “stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world”. In 2014, the UK government issued a £200 million (Dh955m) sukuk, the first such sovereign bond issued by a country outside the Islamic world.

At the same time, some specialists in the field believe the current fears are overstated.

The UK-listed asset manager Rasmala, which operates several Sharia-compliant funds, has downplayed the possible effects on the Islamic finance sector of the decision to leave the EU, while the Bank of London & The Middle East (BLME) said it is “open for business as usual” following the vote.

The exit of the UK from the EU would likely mean that London-based financial institutions lose “passporting” privileges, which allow them to access the single market without restrictions. Those rights were cited by many campaigners as one of many reasons for Britain to remain a member of the EU.

But Zak Hydari, the chief executive of Rasmala, said that this is not of great importance.

“European passporting has not been of significant importance to domestic Islamic banks in Europe since their operations are typically confined to the home market and are not typically pan-European,” Mr Hydari said in an interview. “As a result, deposit taking should not necessarily be affected by Brexit.”

Rasmala targets Gulf investors, offering conventional and Sharia-compliant investment products. Rasmala’s thinly traded shares have dipped since the Brexit vote, from 97.5 pence on June 23 to 94.5 pence yesterday afternoon on London’s AIM.

Mr Hydari said that he had not seen a big impact on investors’ attitudes following the Brexit vote. “At this early stage, investors [who are typically Gulf-based] have not yet expressed significant concerns since markets like the UK are considered fundamentally robust and transparent and therefore remain attractive in the long-term.

“Some Gulf investors may indeed consider the recent currency movements as a potential buying opportunity,” he said.

Mr Hydari said that he does not see the UK’s standing in Islamic finance being reduced.

“Since the early 2000s, the UK’s Islamic finance ambitions have been driven by the development of a strong legislative framework that allows for Islamic finance to operate on a level playing field. This does not change as a result of Brexit,” he said. “The UK’s aspiration to be the leading non-Muslim majority Islamic finance hub will mirror the ongoing status of London as a global conventional financial centre.”

The Sharia-compliant BLME said that it planned to continue its operations in the UK capital despite the Brexit vote.

“Following the vote to leave the EU there will be much debate about what happens next,” a spokeswoman said. “We are clear that we remain committed to our customers. We are open for business as usual in London and Manchester and there are no plans for this to change. BLME will continue to work closely with government and the regulator to develop an environment in which Sharia finance and investment can thrive.”

Despite the “business as usual” outlook held by Rasmala and BLME, some observers are warning of a potential impact on the Islamic finance sector.

Nafis Alam, an associate professor of finance and the director of the Centre for Islamic Business Finance and Research at the University of Nottingham’s Malaysia campus, wrote that the referendum result might lead London to “lose its jewel in the crown and Islamic investors … look for a more favourable hub such as Paris, Frankfurt or Berlin”.

He said that it was “too early to assess” whether there will be a long-term impact on London’s Islamic finance sector. But if conventional banks start leaving London, their Islamic counterparts could follow, he said.

“London is seen as being like the Malaysia of Islamic finance in the western world,” Mr Alam said. “If there is a movement of capital from the London banking sector, or if there is a lot of brain drain in the UK in terms of the financial expertise, that will give a dent to [the growth of] Islamic finance in the long run.”

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Brexit vote hits markets and sparks recession fears

LONDON // Britain’s vote to leave the European Union hit world markets like a bombshell on Friday, sending stocks into free fall, pushing the pound to a 31-year low and sparking fears of a global recession.

David Cameron confirmed he would stand down as prime minister after suffering a devastating defeat in which 51.9 per cent of Britons voted to end the country’s 43-year membership of the EU.

The referendum result sent shock waves through international markets, bringing warnings of investment cuts, job losses and global recession.

An estimated US$2 trillion in value was wiped off global stock markets on Friday, Reuters reported.

London’s benchmark FTSE 100 index tumbled by more than 8 per cent in early trading, wiping more than £100 billion off the value of the UK’s top companies. It later recovered, ending the day down 3.15 per cent. Other global markets suffered, with the Dow Jones industrial average tumbling by 2.8 per cent in the first few minutes of trading.

“We’re not forecasting a recession at this stage, but we would say that the risk of recession in the UK is now running at around 35, 40 per cent – very elevated indeed,” said Azad Zangana, senior European economist at asset management firm Schroders, in a conference call.

Others went further, with asset manager T Rowe Price Group putting the risk of a global recession at more than 50 per cent.

Mr Zangana said foreign investment in the UK had already been affected by the prospect of an exit from the EU.

“Over time, as the pull-off in investment starts to feed through into a slowdown in jobs growth, maybe even job losses, the household sector will also start to feel the pain,” he said.

The declining value of the pound – which fell by as much as 10 per cent against the dollar on Friday before settling at about 8 per cent lower – could also lead to higher import prices and higher inflation, Mr Zangana said.

The Brexit vote result also saw oil prices plummet, with Brent crude down 4.24 per cent at $48.75 a barrel at 1.40pm in New York. Gold prices soared as investors sought “safe haven” assets, with the price on the Comex division of the New York Mercantile Exchange up 4.49 per cent at $1,319.80 an ounce at 1.05pm EDT.

Despite the global shock waves, some said the impact of the Brexit vote was likely to be less dramatic than that of the 2008 financial downturn or sovereign debt crisis that hit Europe in 2011.

“This is a much more modest event … hence I do expect that the reaction will be more short-lived,” said Paras Anand, head of European equities at Fidelity International.

Chris Doyle, director of the London-based Council for Arab-British Understanding, said the path ahead would be “bumpy” and that Britain remained “very divided”.

“It’s going to be a huge effort just to bring the country back together again after this very bitter and divisive campaign,” he told The National.

Mr Doyle said that he did not expect big changes in relations between Britain and the Arabian Gulf and wider Arab world.

“Our relations with the Gulf will probably remain very strong,” he said. “There will be some areas though that do change … If there is an economic downturn in Britain we may not have the resources to fund assistance to Syrians, for example, in the way that we have been hitherto.”

Prominent Remain campaigner Richard Reed, the co-founder of the smoothie brand Innocent, of which Coca-Cola took full control in 2013, said he was not surprised to see the markets react so dramatically.

“I’m not predicting doomsday, although if you look at the markets it’s pretty doomy,” he told The National. “Britain as a country had it all. And now we’re going to have a bit less.”

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London

The London Mayor Sadiq Khan wants Europeans living in the British capital to feel welcome in the city despite the result of the EU referendum. Below is a imeline of events as the result became clear.

In a statement posted on his Facebook page, Mr Khan praised London’s “nearly one million European citizens” as hard-working, tax-paying residents contributing to civic and cultural life, according to AFP.

“You are welcome here. We value the enormous contribution you make to our city and that will not change as a result of this referendum,” Mr Khan said.

“We all have a responsibility to now seek to heal the divisions that have emerged throughout this campaign – and to focus on what unites us, rather than that which divides us.”

Timeline of reactions to UK vote to leave the European Union:

All times UAE

2.45pm

Paras Anand, the head of European Equities at Fidelity International, said that the Brexit had caused “some ructions within the market”, but added that the economic fallout was likely to be less dramatic than the financial downturn or sovereign debt crisis.

“This is a much more modest event, in terms of [its scope] to shape macroeconomics. And hence I do expect that the reaction will be more short lived,” he said.

“Typically the market tends to get less dramatically disrupted by events that it tends to analyse in advance. It’s much more the things that come from leftfield that tend to precipitate much more pronounced distortions or dislocations in market.”

He added however that the Brexit vote could lead to higher inflation forecasts over the next six or 12 months.

2.30pm

The prominent Remain campaigner Richard Reed, the co-founder of smoothie brand Innocent, of which Coca-Cola took full control in 2013, said he was not surprised to see the markets react so dramatically this morning.

“I’m not predicting doomsday, although if you look at the markets it’s pretty doomy,” he said.

“Britain as a country had it all. And now we’re going to have a bit less,” he added. “There’s more in common than [what] divides us. And we have to find a way to rediscover that.”

2.14pm

The commentator Chris Doyle, a director of the London-based Council for Arab-British Understanding, said that the path ahead would be “bumpy” and that Britain remains “very divided”.

“It’s going to be a huge effort just to bring the country back together again after this very bitter and divisive campaign,” he said.

Mr Doyle said that he did not expect big changes in relations between Britain and the Arabian Gulf and wider Arab world.

“Our relations with the [Arabian] Gulf will probably remain very strong,” he said.

“There will be some areas though that do change… If there is an economic downturn in Britain we may not have the resources to fund assistance to Syrians, for example, in the way that we have been hitherto.”

1.03pm

The FTSE 100 index tumbled in the first few minutes of trading, wiping more than £100 billion (Dh544.13bn) off the value of the UK’s top companies.

Azad Zangana, the senior European economist at the asset management firm Schroders: “We’re not forecasting a recession at this stage, but we would say that the risk of recession in the UK is now running at around 35, 40 per cent – very elevated indeed.

“This period of uncertainty now, as these negotiations take place, will probably lead to a significant delay, postponement and even cancellation of many investment projects, both funded domestically and through foreign direct investment. We’d already seen evidence of this starting from about six months ago. We suspect this will now continue.

“The UK benefits disproportionately from foreign direct investment, so it will be a more significant shock than most people anticipate.

“Over time, as the pull off in investment starts to feed through into a slowdown in jobs growth, maybe even job losses, the household sector will also start to feel the pain.”

The fall in the value of sterling “could continue for some time”, leading to higher import prices and higher inflation, Mr Zangana said.

He warned of “potential contagion spreading through a number of the markets” in Europe, with the possibility of other referendum votes on EU membership.

12.50pm

Rory Bateman, the head of European equities at Schroders: “Today’s reaction is not going to be representative. There is a significant amount of panic in the market [and] significant uncertainty overall. And today’s reaction will be a kneejerk reaction,” he said.

“The market hates uncertainty as we know… We need some political certainty in order to stabilise markets.

“Domestically focused businesses are likely to underperform relative to the international players,” he said. “78 per cent of FTSE 100 revenues are derived overseas, and in actual fact a lot of those businesses will be significant beneficiaries of sterling weakness.”

London

All times UAE

1.03pm

The FTSE 100 index tumbled in the first few minutes of trading, wiping more than £100 billion (Dh544.13bn) off the value of the UK’s top companies.

Azad Zangana, the senior European economist at the asset management firm Schroders: “We’re not forecasting a recession at this stage, but we would say that the risk of recession in the UK is now running at around 35, 40 per cent – very elevated indeed.

“This period of uncertainty now, as these negotiations take place, will probably lead to a significant delay, postponement and even cancellation of many investment projects, both funded domestically and through foreign direct investment. We’d already seen evidence of this starting from about six months ago. We suspect this will now continue.

“The UK benefits disproportionately from foreign direct investment, so it will be a more significant shock than most people anticipate.

“Over time, as the pull off in investment starts to feed through into a slowdown in jobs growth, maybe even job losses, the household sector will also start to feel the pain.”

The fall in the value of sterling “could continue for some time”, leading to higher import prices and higher inflation, Mr Zangana said.

He warned of “potential contagion spreading through a number of the markets” in Europe, with the possibility of other referendum votes on EU membership.

12.50pm

Rory Bateman, the head of European equities at Schroders: “Today’s reaction is not going to be representative. There is a significant amount of panic in the market [and] significant uncertainty overall. And today’s reaction will be a kneejerk reaction,” he said.

“The market hates uncertainty as we know… We need some political certainty in order to stabilise markets.

“Domestically focused businesses are likely to underperform relative to the international players,” he said. “78 per cent of FTSE 100 revenues are derived overseas, and in actual fact a lot of those businesses will be significant beneficiaries of sterling weakness.”

Governance in focus: Boardroom superheroes can carry weight of the world – but should they?

Those holding multiple seats on company boards are often called the supermen and women of the business world.

But given the dizzyingly long CVs boasted by some, questions arise as to whether these “superheroes” are more like villains when it comes to effective corporate governance.

The UAE’s new 2015 commercial companies law says that individuals should not hold more than five board positions, two chairmanships or one managing director role.

Yet there is evidence that some UAE business people have far exceeded these limits, with some holding down a dozen or more positions.

Andrew Kakabadse, the professor of governance and leadership at Henley Business School in the UK, says some individuals in the UAE have held up to 29 positions concurrently, citing his own research.

Prof Kakabadse – who until last year held a government consulting job in Abu Dhabi, although was not resident in the UAE – says that the maximum number of non-executive board seats held by one individual should be three to four, or two chairmanships.

But some people hold many more than that – leading to woefully ineffective boards, said Prof Kakabadse.

“About 90 to 95 per cent of boards across the world … are seen by management and other stakeholders as not providing much value. One of the reasons is that board directors are holding too many positions,” he said. “These directors turn up to meetings to fundamentally rubber stamp, because they have no way of knowing the value of the data put in front of them.

“Because they don’t know much about the company, they don’t know how to ask the difficult question. Because they don’t know what the difficult question is.

“So what do you have? You have completely worthless boards.”

There are of course exceptions to this, and many examples of highly effective boards. Some companies require board members to visit different locations and ask staff difficult questions, to help encourage “stewardship” and the better guidance of the company.

And there are moves to address the issue of multiple directorships globally, Prof Kakabadse said. In London, for example, there is now more “scrutiny placed on how many board positions” are held by individuals, he said.

“You are beginning to see [globally] a growing respect for the need to have high-performing board directors,” he said. “The idea that you need some sort of superman to deal with all these issues is simply not true. You simply have to have somebody who fundamentally understands the company and they can step back and say, ‘now let me think through what all you guys are doing, and give you my opinion’.”

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Governance in focus

Management: Know your requirements before you set up a board

Teamwork: The board is a team, and that’s how it must work

Workplace Doctor: Abu Dhabi firm failing to maintain corporate governance principles

Awareness: UAE companies increasingly aware of gains to be had

AGMs: When annual meetings become forums for confrontation

Virtual AGMs: When the AGM is everything but personal

Editor’s letter: An issue important to our well-being

History: Be good, because investors are watching more closely

Poll: Corporate governance in the UAE – have your say

Analysis: A good board brings right mix of knowledge and culture

Gender equality: 30% Club GCC chapter to boost women numbers on company boards

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Prof Kakabadse said that the issue of people holding multiple board positions is worst in countries such as South Africa – where he has found evidence of people holding as many as 45 board positions concurrently – along with the UAE and United States. The problem in the UAE, he said, was due to “inner relationships and family relationships”. But Prof Kakabadse said he also saw a willingness to improve the situation in the country.

“When I went to the various institutes of the UAE – banks, funds, also the governance institutes of the UAE, the entrepreneurship schools and so on – there is a keen interest to improve,” he said. “In that sense the UAE stood out a little bit above many other Middle Eastern countries.”

Not all are so critical of those who hold multiple board positions.

Alvaro Abella, a managing partner at the venture capital firm Beco Capital in Dubai, said that it all depends on the individual involved. He pointed to the likes of Elon Musk, who is said to work up to 100 hours a week – and has been highly effective as a businessman.

“On average as long as you are able to maintain the focus, and are able to pull your weight in terms of what you’re expected to do working for the board, it’s up to the individual really,” said Mr Abella.

Fause Ersheid, a senior corporate governance analyst and researcher at the Abu Dhabi Centre for Corporate Governance, pointed to the relatively small population of Emiratis as one justification for some holding multiple positions.

“It is only natural to allow experienced and qualified directors to hold more than one directorial position,” he said.

There are, in fact, some advantages to individuals serving on more than one board, he said.

“[These] include diversifying their relative experience, having access to high-profile directors, which in turn raise the profile of the company seeking to hire them, and filling the experience shortage gap,” said Mr Ersheid.

But he acknowledged there are drawbacks, too.

“Board members might not have the … time to properly prepare for board meetings, so their potential value added to the company and their effective contribution to the overall decision-making process will be limited,” he said.

One “superman” who knows all about the limits of time is Kurt April, whose numerous academic roles include positions at the University of Cape Town and Ashridge Executive Education in the UK.

The South African juggles 11 jobs, including his academic work, seats on four boards, running his own consulting firm as well as a BMW dealership.

Prof April was happy with this arrangement until about 18 months ago, when he suffered a panic attack in a hotel in Australia, induced, he says, by a lack of sleep.

“I was acting like I was a superman,” said Prof April. “But the downside was that I was living on three hours’ sleep.”

He has studied the phenomenon of those holding down multiple jobs, as well as the health implications of this.

“A lot of the executives are living on antidepressants; testosterone levels are down. They’re just hanging on, basically,” he said. “They’ve run their bodies and minds ragged, just keeping up. And so this notion of the superman is actually coming back to bite them.”

The academic believes that an individual should hold no more than three board positions.

He pointed to more stringent corporate governance regulation globally, such as rules holding board members personally accountable for business failures, as making people think twice before taking lots of positions.

“If you go back 10 or 15 years, people used to sit on, ridiculously, 13 boards. I’m not sure how much value one could add on 13, but people did it. But now that you get pulled into court personally … some people have narrowed down the amount of boards they sit on.”

For Prof April personally, it was the health pressures of constant travel and getting very little sleep that forced him to reprioritise his working life.

“That has caught up with me now,” he said. “I certainly can’t live on three hours’ sleep any more, I did that for 20 years. Hence the panic attack 18 months ago.”

So there may still be corporate supermen out there – but their superpowers can come at a cost.

business@thenational.ae

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Governance in focus: How it can guide start-ups and foster innovation

Dynamic startup businesses and the onerous requirements of corporate governance can often seem worlds apart.

Young high-tech ventures are often run on a shoestring by a tiny team, with some not even having established how they’ll actually make money. Many new entrepreneurs can only dream of an initial public offering, and the formal corporate governance requirements that can bring.

But the principles of good governance can still be of great value to start-ups, says the managing partner of one Dubai-based venture capital group.

Alvaro Abella, managing partner at Beco Capital – which manages a portfolio of nine investments including stakes in the taxi app Careem, the marketplace JadoPado and auction site SellAnyCar.com – says governance principles such as having independent directors, regular reporting and diversity can all be useful to startups.

Here Mr Abella explained how good governance can be a boost to innovation:

What use is corporate governance in fostering innovation?

It can facilitate ideas flow, for instance, by having advisers and independent directors on the board, who are subject-matter experts in areas where the company wants to innovate. That’s a way to actually get fresh ideas, partnerships and contacts into the company. An up-and-coming start-up that is trying to do things in a different manner obviously requires some mentorship, some guidance and some advice.

Are there any other corporate governance guidelines – like on women being nominated to boards, or remuneration policy – that are relevant to young businesses?

Definitely incentives, and how incentives are created, can have a role in how a company moves forward in terms of innovation, how fast it can innovate. Diversity is always good. And I think reporting, and getting into a rhythm of reporting for start-ups is something that will be required more and more. We generally think it’s good for start-ups to get into the discipline of reporting on a periodic basis.

Is this something that Beco Capital considers when it looks at businesses to invest in?

We definitely do that. And we not only talk the talk but walk the walk. We have an advisory board, we have people who are in attendance and whom we seek council from ourselves. And we definitely look to do that in any of the boards that we put together and establish in young companies.

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Governance in focus

Management: Know your requirements before you set up a board

Teamwork: The board is a team, and that’s how it must work

Workplace Doctor: Abu Dhabi firm failing to maintain corporate governance principles

Awareness: UAE companies increasingly aware of gains to be had

AGMs: When annual meetings become forums for confrontation

Virtual AGMs: When the AGM is everything but personal

Editor’s letter: An issue important to our well-being

History: Be good, because investors are watching more closely

Poll: Corporate governance in the UAE – have your say

Analysis: A good board brings right mix of knowledge and culture

Gender equality: 30% Club GCC chapter to boost women numbers on company boards

__________

business@thenational.ae

Follow The National’s Business section on Twitter