Arabian Business / An ITP Media Gr oup P ublic ation Dubai Mumbai London New York UAE: AED 15 BAHRAIN: BHD 1.500 OMAN: OMR 1.500 KUWAIT: KWD 1.200 #21/06 March 15 – 28, 2020 Pandemic ProfitsCFA Institute dedicates itself to building trust in the investment management profession. We strive for a more efficient and transparent industry because we believe stronger capital markets and healthy economies begin with putting investors’ interests above our own. Demand the best. Demand a CFA® charterholder. Get started at letsmeasureup.org LET’S BUILD FAIR AND TRANSPARENT FINANCIAL MARKETS. LET’S MEASURE UP. © 2020 CFA Institute. All rights reserved.www.arabianbusiness.comSUBSCRIBE NOW +971 4444 3000 www.itp.com/subscription 3 C OVER S T O RY Pandemic Profits: the businesses cashing in on coronavirus Global markets have taken a chilling hit amid the coronavirus epidemic, but some sectors are bringing in the dough By Bernd Debusmann Jr G AMING The rise of the gaming industry in the MENA Gaming in the Middle East is experiencing 25 percent annual revenue growth, making it the fastest growing market in the world LUXU RY WAT C H E S Clock is ticking Luxury watch brands are facing more competition than ever to stay relevant in an ultra-tech environment while remaining true to the centuries-old craftsmanship 24 arabianbusiness#arabian businessarabianbusiness FIR S T WORD q HOW LONDON'S FINANCIAL WATCHDOG MISSED THE WARNING SIGNS ON NMC REMAINS A MYSTERY” 3040 #21/06 March 15 – 28 2020 Arabian Business /Contents ON'S TCHDOG ARNING C STERY”” Lubna Hamdan Editor Lubna.Hamdan@itp.com4 Vol. 21/06, March 2019 C ONTENT S 46 S TAR TUP Entrepreneur of the week: Francisco Pellegrini, CEO of Yalla Baby Box The online retailer is helping parents save money 48 DINING VENUE S Dubai’s best-kept speakeasy bars, lounges and nightclubs for business and pleasure The emirate is never short of places to visit 22 THE BIG PICTURE IRAQ’S BATTLE AGAINST AN UNSEEN THREAT An Iraqi civil defence worker disinfects a billiards hall in Ashar District in Basra, Iraq as part of government efforts to contain the Covid-19 coronavirus The latest property launches in Dubai While the market may be challenging at the moment, it has not put developers off launching new projects 50 FIVE THINGS T O KNOW ABOUT... 10 AR ABIAN B U SINE S S INNOVATION SERIE S We look at what the key technological challenges and opportunities are for the UAE as it aims to lead the region in 5G connectivity 12 C OMMENT It’s better late than never for companies to adopt remote working, says Marc Pelletier UPFR ONT 18 THREE REAS ONS WHY The drop in oil prices has placed Gulf currency peg back in spotlight 18 AVIATION Emirates has been voted the best regional airline in 2019 19 SPOR T Formula 1 has announced a new long-term global sponsorship deal with energy giant Saudi Aramco 19 PER S ON OF THE WEEK Dr Shaikha Salem Al Dhaheri of the Environment Agency – Abu Dhabi ALPINE EA GLEALPINE EA GLE With its pure and sophisticated lines, Alpine Eagle offers a contemporary reinterpretation of one of our iconic creations. Its 41 mm case houses an automatic, chronometer-certified movement, the Chopard 01.01-C. Forged in Lucent Steel A223, an exclusive ultra-resistant metal resulting from four years of research and development, this exceptional timepiece, proudly developed and handcrafted by our artisans, showcases the full range of watchmaking skills cultivated within our Manufacture.INDEP TH NEWS S U B S CRIBE NOW www.itp.com/subscriptions +971 4 4443000 AD VER TISEMENT EXPER T VIEWS EXCLU SIVE INTERVIEWS PUBLISHED BY AND © 2020 ITP MEDIA GROUP FZ-LLC. MEDIA WHEN YOU HAVE FINISHED WITH THIS MAGAZINE, PLEASE RECYCLE IT NOTICE The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. The opinions and views contained in this publication are not necessarily those of the publishers. 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PO Box 500024, Dubai, UAE Tel: +971 4 444 3000 Offices in KSA, UAE, UK, US, and INDIA ITP MEDIA GROUP CEO Ali Akawi MANAGING DIRECTOR Sue Holt DEPUTY MANAGING DIRECTOR Anil Bhoyrul EDITORIAL EDITOR-IN-CHIEF Rob Corder, rob.corder@itp.com EDITORIAL DIRECTOR Shane McGinley, +971 4 444 3496, shane.mcginley@itp.com EDITOR Lubna Hamdan, +971 4 444 3466, lubna.hamdan@itp.com CHIEF REPORTER Bernd Debusmann Jr, +971 4 444 3145, bernd.debusmann@itp.com REPORTER Gavin Gibbon, +971 4 444 3845, gavin.gibbon@itp.com HEAD OF VIDEO CONTENT Shruthi Nair, +971 4 444 3264, shruthi.nair@itp.com SUB EDITOR Edward Liamzon, +971 4 444 3474, edward.liamzon@itp.com ARABIANBUSINESS.COM EDITOR Neil Halligan, +971 4 444 3605, neil.halligan@itp.com UK EDITOR Alicia Buller INDIA EDITOR James Mathew STUDIO ACTING CREATIVE DIRECTOR John Marsland STUDIO MANAGER Abuzar Samo SENIOR IMAGE EDITOR Emmalyn Robles SENIOR PHOTOGRAPHERS Efraim Evidor, Adel Rashid STAFF PHOTOGRAPHERS Aasiya Jagadeesh, Ajith Narendra, Fritz John Asuro, Yuliya Petrovich, Jessica Samson PRODUCTION & DISTRIBUTION GROUP PRODUCTION & DISTRIBUTION DIRECTOR Kyle Smith PRODUCTION MANAGER Basel Al Kassem PRODUCTION COORDINATOR Manoj Mahadevan EVENTS & MARKETING DIRECTOR OF AWARDS & MARKETING Daniel Fewtrell +971 4 444 3684, Daniel Fewtrell@itp.com CIRCULATION DISTRIBUTION & WAREHOUSE MANAGER Praveen Nair CIRCULATION EXECUTIVE Loreta Regencia ADVERTISING GROUP COMMERCIAL DIRECTOR Joe Chidiac, +971 4 444 3121, joe.chidiac@itp.com HEAD OF SALES – AGENCIES Mario Saaiby, +971 4 444 3592, mario.saaiby@itp.com SALES MANAGER Dima Mousseli, +971 4 444 3589, dima.mousseli@itp.com DIGITAL GROUP COMMERCIAL DIRECTOR Joe Chidiac, +971 4 444 3121, joe.chidiac@itp.com HEAD OF SALES – AGENCIES Mario Saaiby, +971 4 444 3592, mario.saaiby@itp.com ITP GROUP CEO Ali Akawi CFO Toby Jay Spencer-Davies CORPORATE WEBSITE itp.com CIRCULATION CUSTOMER SERVICE +971 4 444 3000 WEB arabianbusiness.comFIR S T WORD / Lubna Hamdan, Editor FI RS TTTTTTTTTTTTTTTTTTTTTTTTTTTT WOWOWWOWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWRD / Lu 8 Vol. 21/06, March 2020 Q ALL EYES ARE NOW ON UAE EXCHANGE, A SUBSIDIARY OF FINABLR, THE LONDON-LISTED FINANCIAL SERVICES HOLDING COMPANY OWNED BY NMC BILLIONAIRE BR SHETTY” NMC: who knew what, when? How London’s fi nancial watchdog missed the red fl ags remains a mystery they are providing sufficient protection to the investors when it comes to overseas companies becoming listed in the UK. “Serious Fraud Office may step in to find reasons for getting engaged in the worst-case scenario, where the company has been overstating its assets or understating its debts,” he told us. Room for abuse? Muddy Waters’ own Carson Block told us in January there is more room for abuse in Middle East companies that are listed abroad compared to listed companies in developed markets. “If you take companies in emerging markets that are listed in developed markets, there is tremendous opportunity for abuse… whether it’s China or the emirates,” he said. “The issue is that, in a developed market, it’s going to be much harder to find counter parties to assist you in your fraud and engage in a series of sham transactions with you and invoices that aren’t going to be paid. If you find somebody in the UK who is willing to do that, that person is running a risk of real prison time in the UK, but if you’re in an emerging market, you’ll say look we’re not ripping off anyone you care about, we’re listed overseas, we want to inflate our CapEx [capital expenditures] here. “That is the fundamental problem. We’ve taken these listing standards and audit playbooks that were written for developed market companies that don’t exist in that environment and we’ve made some changes but these are only slight adaptations to these playbooks, leaving the door wide open for companies that are committing serious abuses to be listed,” he said. Here’s looking at you, UAE Exchange All eyes are now on UAE Exchange, a subsidiary of Finablr, the London-listed financial services holding company owned by NMC’s BR Shetty. Sources told us off the record they had speculated that Shetty was “propping up NMC financially with cash in UAE Exchange. If that’s what’s going on, it’d be a massive, massive problem,” they said. UAE Exchange did not respond to requests for comment. The speculations came just two days after it confirmed it was experiencing delays in money transfers, particularly in the UK, blaming them on an alleged cyber-attack. FCA, are you listening? THE MIDDLE EAST ISN’T EXACTLY renowned for its corporate governance, which is why when NMC Health was accused of fraudulent asset values and theft of company assets in December, investors were all too eager to drop the I-told-you-sos. NMC had always been the low-hanging fruit for short sellers, one UAE investor told us on condition of anonymity, meaning it came as no surprise when Carson Block, founder of Muddy Waters, published a 34-page report citing concerns over financial discrepancies in NMC and disclosing a short position in the company founded by Indian billionaire BR Shetty. Fast forward to March and NMC Health has had its shares suspended from trading on the London Stock Exchange after they dropped more than 60 percent, leading the UK Financial Conduct Authority (FCA) to open a formal enforcement investigation into the company. On March 12, NMC announced its debt levels have risen to nearly $5 billion, with over $2.7 billion in facilities that had previously not been disclosed to or approved by the board. How the company’s auditors Ernst & Young fail to flag the discrepancy is a mystery. Sound the alarm But more baffling is how the FCA had miraculously missed all the warning signs, and then taken months to open an investigation. It wasn’t too difficult for Block to write his 34-page report. He told us in January that the information was all available online to anyone who bothered to look. So did the FCA just not bother to look? And more importantly, if the regulator is investing NMC, who is regulating and investing the regulators? Because if we’re going to hold the Middle East accountable for its so-called incompetent corporate governance practices, we should also hold the United Kingdom’s financial watchdog responsible for its actions – or in this case, lack thereof. Two weeks ago sources familiar with the matter told us off the record that accountants had warned the FCA about financial discrepancies at NMC Health before it listed in 2012. The FCA did not respond to requests for comment. Vijay Valecha, Chief Investment Officer at Dubai- based Century Financial told us the FCA “may need to revisit the listing rules as the NMC scandal clearly raises a question whether u Regulating the regulators What is the FCA’s role in the NMC saga?For more information IF THE BEST OF BOTH WORLDS IF ONLY there was a place that provided unparalleled access to the fast-growing Middle East, Africa and South Asia markets. IF ONLY there was a place with an internationally recognised legal and regulatory infrastructure. IF ONLY there was a place with an established ecosystem of over 24,000 professionals working across 2,200 top global companies. There is. DIFC. Set up your business in the region’s leading financial hub today. @difcdifc.aeNext >