Inayat-ur-Rahman, Business Editor

The UAE has taken a leadership role in the Middle East region with the government sector leading the charge in technology adoption. Dubai has largely been responsible for changing the mindset when it comes to adopting new technologies.

From visa reforms to monumental deregulations, like 100% ownership of foreign businesses, the UAE has been enhancing its competitiveness to attract foreign direct investments (FDI). As a result, FDIs into the UAE rose to $19.88 billion in 2020, up 44.2% from the previous year, in the face of the pandemic, when investments across the globe plummeted to historic lows.

In recent years, with population growth, globalization, and systemic challenges like climate change shaping the world, financial markets have witnessed certain knock-on effects. And these effects are gradually making their presence felt. Ever since the pandemic outbreak, however, the influence of these factors has increased significantly. And individual investors are now beginning to take stock of these “themes” and macro-level trends, which are likely to pay great dividends in the long run. Such awareness is especially pronounced in forward-thinking economies like the UAE, if the findings of a recent survey are anything to go by.

The Continental Group, a leading insurance intermediary and financial services solutions provider in the GCC region, organised a webinar , in which the participants were surveyed on investment trends. Around 71% of respondents said that technology trends like Artificial Intelligence and Robotics will dominate the capital markets in the near future. What is the inference here? And why is important, at this juncture, to keep pace with evolving customer sentiments?

Offering some clarity is Karen Kharmandarian, a Senior Portfolio Manager at Thematics Asset Management, who was one of the main speakers at the webinar. “As we gear up for the post-pandemic revival, the prevailing investor sentiment provided the perfect backdrop for the Continental Group to host a webinar on thematic investment strategies, and bring diverse ideas to the table. Such endeavours will help all our stakeholders effectively navigate new challenges, and extract maximum value from newly emerging digital investment classes,” he said.

Kharmandarian’s words are consistent with several other developments in the UAE in recent years, especially within the context of the Expo. As part of its future readiness and economic diversification strategies, the UAE has been strengthening emerging investment classes that, following the pandemic, are breaking new ground.

By definition, thematic investing strategies are aimed at capturing opportunities created by long-term structural trends, without paying heed to short-time cyclicality. Achievable value and returns depend on investors’ understanding of underlying drivers of long-term trends or “themes”. Experts present during the webinar unequivocally agreed that thematic investing can generate alpha at scale. However, if investors are slow to recognize thematic drivers, they may find it hard to maximize their returns in the long run.

Thematic investing is also relevant in the current investment climate, when diversified approaches within specific risk bands can give investors the resilience they need in their portfolios. Just traditional bonds and equities may not be the answers to all the curveballs that capital markets throw at both retail and institutional investors. This strategic shift, from traditional models to future-ready ones, is happening at a macro level in the UAE.

It’s interesting to note that a sizable chunk of the FDIs was drawn by the IT sector, by companies dealing with AI, VR/AR, IoT, and robotics. Even renewables and EVs have registered healthy FDI growth, in what can be regarded as a visible shift in investor sentiment towards “themes”. Not only are investors identifying these themes, but they are exploring investment opportunities across the thematic value chain, according to Neelam Verma, Vice President and Head of Investments at The Continental Group.

“At The Continental Group, our focus has always been towards providing well-researched themes, within the equity and fixed income space, to build our clients’ wealth, in a way that is completely aligned with their risk tolerance”, said Neelam. “Our recently concluded webinar, ‘What Themes will Define the Decade: Harness the potential of thematic investment strategies for structural growth’, showcases our commitment towards achieving investors’ financial goals and objectives, with the help of our experienced team of advisors. As we move towards the new normal, our clients can look forward to innovative thematic solutions and offerings, to add to their portfolios,” she added.

By one estimate, globally, there are 27 billion connected devices in 2021, up from 17.1 billion in 2016. And fuelled by pandemic-induced accelerated digitization, the numbers are increasing rapidly as we speak. So, with a meteoric increase in connected devices, and all devices generating more and more data, the scope for increased adoption of AI and automation across business and industry is naturally high. It is therefore unsurprising that a majority of respondents in the Continental Group’s survey chose technology as their primary focus.