+44 01483 457477

XTB’s Achraf Drid Discusses FX Growth and MENA Region

Advertisements

In this interview published on Finance Magnates: XTB’s Achraf Drid Discusses FX Growth and MENA Region, and yet not only that. In effect, it does enlighten us on how:

  • The MD of XTB MENA believes that the FX market will continue to grow in 2022.
  • Drid highlighted XTB’s growing sponsorship activities to increase its global presence.

By Bilal Jafar

The above image is for illustration and is of Finance Magnates by Daily Advent.

Achraf Drid

In an exclusive interview with Finance Magnates, Achraf Drid, Managing Director of XTB MENA, recently discussed the global growth in trading volumes across the FX and CFD market. Drid believes that the MENA region holds a special place in the global financial services industry.

XTB is one of the largest financial brokerages in the world. Listed on Warsaw Stock Exchange, the financial trading services provider witnessed rapid growth in 2021.

It’s a pleasure having you with us Mr. Drid, for our readers, can you please introduce yourself?

Thank you for having me; it is my pleasure. I am the Managing Director of XTB MENA DIFC in Dubai, and XTB is one of the world’s leading brokerage companies. In my role, I’m actively involved in the company’s business development, legal processes, and all compliance aspects. I am also deeply involved in the company’s financial strength in investing in Fintech since we provide our customers not only the highest level of customer support but also the highest level of technology. Since XTB entered the MENA region, I have focused mainly on setting up and managing the company’s core sales and risk management processes. I’m also involved in the regulatory framework of the company to lead XTB into the future with integrity and transparency.

We are new to the MENA region, but we have been around since 2005 when XTB was founded in Warsaw as a company. We are one of the biggest brokerages in Europe and are also listed on the Warsaw Stock Exchange. Worldwide, we have been offering CFDs, Forex, commodities and indices for years, and then we saw an opportunity in the MENA region to cater to the increasing demand for a reliable and trustworthy broker in this part of the world.

What differentiates us from other brokers? First, we are not just a financial company, we are a fintech firm, since we employ more than 200 IT developers in our headquarters, and we keep improving our offering and services every month. We are not looking to be compared with other brokers; our goal is to be the Amazon or Netflix of trading.

Secondly, many brokers rely on the MetaTrader 4 platform, but we also offer our proprietary platform called xStation, which has won numerous awards. We have a large IT team responsible for keeping it up-to-date and who ensure it’s always working at top efficiency. I’m proud of our GUI platform and honestly believe it’s one of the best in the market.

Finally, we place a significant focus on education. I believe we’re one of the most education-focused brokerages in the world. Many resources are found on our platform, including various educational videos and reading material. The content recorded hasn’t only been produced by us and by some of the world’s most famous traders. We heavily focus on education when we present our platforms to the clients virtually and when we meet them in person.

Trading volumes across the FX and CFD industry jumped substantially in 2020 due to the lockdown, while the industry sustained growth levels in 2021, do you think the trend will continue into 2022?

The actual gross market value of OTC FX and CFDs has been rising; the Covid-19-induced market turmoil and strong policy responses drove developments in FX markets throughout 2020. This increase coincided with the significant depreciation of the US dollar against other major currencies. Acting as the primary vehicle currency, the US dollar was on one side of more than 80% of all currency pairs (measured by both notional amount and gross market value). Sizeable US dollar exchange rate movements can lead to more trading in FX and CFDs in the current year (2022).

Additionally, if you look back into the last ten years, forex trading has grown exponentially. Looking at the forex market in 2008, there were about US$48 trillion traded, and today that number is closer to US$80 trillion, which shows a growth of over 50%. I believe that the volume will continue to grow in 2022 at a steady rate, with forex trading making up 40% of the world’s total market.

In terms of financial services, the MENA region is one of the fastest-growing regions in the world, what makes MENA different from other locations?

The Middle East’s importance is rapidly growing in the global forex market, especially with its retail segment, compared to a relative slowdown and decline in other international markets.

It is driven by increased investor awareness of the opportunities available in global trading and the region’s strategic location between Asia and Europe as a hub. The local time zone enables it to capture market opening hours in the Far East and the US…and closing hours in the same working day, giving it better access to the broader global market, particularly the G7 currencies.

As we are based out of Dubai and regulated by the DIFC, we have experienced substantial growth of the UAE economy and the increasing number of ex-pats coming to live and work here; we have seen FX transactional flows rising, both in and out of the country.

Going forward into 2022, how is XTB MENA planning to expand its presence in the region?

The MENA region did go through significant challenges during the last two years, (with) the COVID-19 pandemic having an impact on the regional economy, like the rest of the world. However, some countries have adopted rapid, decisive and innovative measures to contain the virus, such as the smooth crisis management developed by regional governments.

MENA countries have responded rapidly to mitigate the economic consequences of the crisis on the private sectors and households and keep the financial market functioning. On average, 2.7% of GDP was allocated to fiscal measures, while 3.4% of GDP (over USD 47 billion) in liquidity injection was activated by Central Banks across the region during the first few weeks of the crisis.

The MENA market is estimated to witness significant growth, and at XTB, we feel very confident. The reason we decided to establish XTB regional office in the UAE is part of our strategic growth plan to support our customers locally, not only in FX but across other asset classes under our portfolio, including oil, gas and bullion.

Sponsorships played an important role in global brand awareness of financial trading platforms, how is XTB planning to use sports sponsorships for its global growth?

In the past, we had a partnership with McLaren Mercedes, then with Hollywood actor Mads Mikkelsen, and now we have a partnership with Jose Mourinho, and we have other plans for the future – for obvious reasons; we would like to keep this as a surprise!

Latest Trends shaping the region’s Start-up Ecosystem

Advertisements

The increase in entrepreneurship and start-ups in the region has been happening over the past decade as revealed by Arabian Business in the latest trends shaping the region’s start-up ecosystem

Financial technologies and e-commerce businesses dominated the market in the Web 2.0 wave, while blockchain and cryptocurrencies are slowly growing in the region

In the post-pandemic economy, it feels like start-ups are launching almost daily in unprecedented numbers, but the Middle East entrepreneurial ecosystem has been steadily growing for almost a decade now, explained Walid Hanna, CEO and founder of MEVP, a venture capitalist firm.

Talking exclusively to Arabian Business, Hanna looked back at the evolution of start-ups in the region and the major trends that dominated each phase until today.

He also shared what venture capitalists look for when deciding whether to invest in a business or not and what challenges remain in the ecosystem.https://www.arabianbusiness.com/startup/why-we-are-never-too-old-or-too-young-to-be-an-entrepreneur/embed#?secret=Azh8pDLw27

What can you tell us about the regional landscape for start-ups in the post-pandemic economy?

The increase in entrepreneurship and start-ups in the region has been happening over the past decade.

We [at MEVP] began our journey back in 2010 and, at that time, we used to see one or two start-ups a week, while now we receive three or four business plans a day, so the multiplier has been enormous in terms of the number of start-ups.

This has been the case post-Covid as well. When the whole ecosystem realised how important technology is during the pandemic, it gave a boost to our portfolio of companies and they grew faster and it also gave a boost to potential entrepreneurs who left their jobs to start their own businesses.

Why do you think fuelled this growth in the pre-coronavirus days?

It’s a natural progression that happened across the US, Europe and China over the past two decades and since there’s always a lag with the Middle East, it’s finally happening here now.

If you look at the penetration rates in internet usage or mobile phone usage, the Middle East has typically been lagging, the exception being countries like the UAE. But, now they’re all catching up.

What are some of the trends you’ve seen among regional start-ups, in fintech and tech in general?

Trends have been evolving over the past decade as well.

Originally there was the Web 1.0 wave, which was only content-based such as browsing the internet for cooking recipes, for example.[Start-ups] were making money, but it was based on reading, there were no interactions or transactions involved.

Walid Hanna, CEO and founder of MEVP. Image: ITP Media Group

Then it evolved into Web 2.0, where we saw a lot of financial technologies, e-commerce sites and software-as-a-service for enterprises. We’ve invested in 60-plus companies across those verticals.

We’ve also seen a lot of mobility plays, such as Uber, and we’ve seen that model [replicated] across tuk-tuks, motorcycles, electric scooters and trucks which, in a way, is good for the environment.

Within fintech, we’ve seen a lot of sub-verticals, such as the Buy Now, Pay Later model, which is a big trend at the moment – there are around ten [such start-ups] in the region and we’ve invested in an Egypt-based one. But there are so many other trends within fintech, including micro-lending, SME-lending or treasury solutions; payment solutions in general.

The hype over non-fungible tokens and cryptocurrencies, the whole blockchain business model, has evolved tremendously over the past couple of years and is just starting to pick up in the Middle East. We’ve seen two NFT marketplaces and a couple of blockchain business models. It is still quite limited, although I expect it to grow much faster in the next three years.

How do you identify the companies you will invest in?

Just as they say “location, location, location” for real estate, it is “people, people, people” for start-ups.

If a start-up is at the earlier stages, the best thing you can look at is how investment-ready the business is and how qualified the founders are with relevant experience. We look at how dynamic, hardworking and motivated they are.

Buy Now, Pay Later model is a big trend at the moment.

We look at the total addressable market and try to understand if it’s big enough and if they are really answering a pain point that is large enough to make serious money. This is because we are not interested in a small niche in a tiny country. For example, if a start-up is trying to solve a small issue in a country like Lebanon and the issue is not the same in Saudi Arabia and the GCC, then we are not interested.

We also look at the business model and the unit economics to see if it is viable, meaning we try to find out if the cost of producing, marketing and selling whatever product is worthwhile. If you look at the cost of acquiring a user and realise that the margin you are making out of this one product is inferior to that, then it is not worth it.

We also look at how robust and scalable the technology itself is and the stack they use. We invest in tech start-ups only.

Growth is key to our assessment of technology companies. We don’t do seed capital so when we invest in Series A, we can already witness a traction behind the start-up. If the traction is interesting, we get interested but if it is not already interesting, we don’t invest.

What are the challenges that remain for entrepreneurs in the region?

It depends on the country. In the GCC, there are no currency risks because they are pegged to the dollar, but if you look at currency in Egypt, they got really hit by the devaluation about three years ago.

There is also a political risk because of the region’s instability and relationship with its neighbouring countries.

Enablers are becoming better and better, but we still have some issues with the banks, for example. Opening up a bank account for start-ups is very challenging across the region. It takes ages and a lot of KYCs.

Five years ago, the logistics were very poor. Even the online payment systems were very poor so it was difficult for start-ups to thrive within that environment. This has been enhanced over the past couple of years but, for some reason, many customers here still want to pay cash-on-delivery and not use credit cards online. Penetration is increasing in terms of card usage but it is still lower than the global average.

Other than that, the ecosystem has evolved well and the enablers have followed. I would say the only challenge that remains is for fintech companies in terms of licence and regulations. Government regulations are making it easier by offering sandbox licences, but other than that, the regulatory framework is quite limited. The process is very slow but will happen one day I am sure.

Exits are happening, but still at a low rate where selling the start-up is difficult. There are more investors from outside the region looking at the region, which is positive, and the big regional conglomerates have also started to acquire start-ups so the trend is good but the numbers are still behind.

We have good start-ups and we want to sell them, but buyers are scarce. We should expand our horizon of buyers towards the global market, such as China or the US.

.

Renewables Market to Expand Robustly in 2021

Advertisements

Renewables Market to Expand Robustly in 2021 by Nidhi is published on MW Creators of 4 December 2021. Some details of this renewables market particularly amongst certain MENA nations are reviewed and found to Expand Robustly in 2021. Excerpts are below.

The above image is for illustration and is of Enterprise as related to the same topic.

It is the Latest Study on the Industrial Growth of the Middle East and North Africa (MENA) Renewables Market 2021-2027.

A detailed study accumulated to offer Latest insights about acute features of the MENA’s Renewables market. The report contains different market predictions related to revenue size, production, CAGR, Consumption, gross margin, price, and other substantial factors. While emphasizing the key driving and restraining forces for this market, the report also offers a complete study of the future trends and developments of the market. It also examines the role of the leading market players involved in the industry including their corporate overview, financial summary and SWOT analysis.

Get customization & check discount for report @ https://www.htfmarketreport.com/request-discount/2909324-middle-east-and-north-africa-2

Summary

The report provides a comprehensive review of the trends, opportunities and challenges in Middle East’s fast-changing renewable energy sector. Updated in April 2020 to reflect the huge disruption caused by the Covid-19 pandemic, the report looks at the immediate impact of the virus on the regional energy market, and its impact on the region’s ambitious plans to develop solar, wind and waste-to-energy projects in the region. The report looks at the long-term investment plans as well as the current project opportunities planned or under development across the region.

Mena Renewables 2020 with Covid-19 update is the latest premium market report from MEED, the leading provider of Middle East business intelligence.

The report provides a comprehensive country-by-country review of the renewable energy sector across the Mena region with in-depth analysis of projected investments, policy and legislative frameworks, and the projects planned and under way.

It also details the key government bodies driving the development of renewables in each country.

Written by MEED, the Middle East market experts within the HTF MI Group, the report is a valuable asset for anyone seeking to do business in the Middle East’s energy sector that will help in shaping business development and strategy in the region.

Updated in April 2020, the report looks at the impact of Covid-19 on the renewable energy sector in the Middle East and North Africa, and what that means for business and investment in the region.

Middle East renewable energy ambitions face new challenges

The de-facto shutdown of much of the global economy in the first four months of 2020 caused by measures to stop the spread of coronavirus (Covid-19) is challenging many of the drivers of business growth and investment in the Middle East and North Africa. The collapse of oil prices and fall in tourism and consumer spending has raised deep questions about some of the region’s highest growth sectors.

One sector that shows no sign of disappearing is renewables. While the supply chain for projects has been disrupted, and the commercial model for privately finance power plants has been upset, the region remains committed to diversifying is energy sources and lowering its costs through renewables.

With about 28GW of renewable energy production capacity installed across the Middle East and North Africa (Mena), of which by far the biggest component is hydropower with 21GW, renewable energy represents only 7 per cent of the region’s power generation capacity. But with electricity demand rising at about 5 per cent a year, and with a shortage of readily available natural gas supplies, expanding renewables capacity is now one of the top policy priorities for governments in the region.

Boosted by falling technology costs and the drive to reduce carbon dioxide emissions, most countries are planning and procuring solar and wind projects. Across the region, governments have set ambitious clean energy targets, with Dubai the most aggressive, aiming for 75 per cent of its energy to come from clean sources by 2050. At the start of 2020, about 98GW of new renewable energy generation capacity was planned across the region, with 39GW of additional capacity due to come on stream by 2025.

The latest edition of Abu Dhabi’s World Future Energy Summit (WFES) in January 2020, highlighted the strides that have been taken in the region, and particularly by the UAE, to play a leading role in the transition from unsustainable carbon-production to sustainable renewable energy.

Completion of the GCC’s first utility-scale renewables projects has increased confidence among governments, developers and financiers. This has reduced the cost of financing and delivering projects. The market also expects greater adoption of small and medium-scale schemes such as rooftop solar.

At present, it is countries with hydropower capabilities that have the highest renewables capacity. The landscape is changing rapidly however as a series of large-scale solar and wind projects are being delivered. But as renewables move from the fringes to the centre of the region’s energy eco-system, regulators, investors and consumers must overcome several structural and technical obstacles.

Regulatory reform is the biggest challenge facing renewables. Merging renewable energy, primarily photovoltaic solar power, into power grids requires policy adjustments and new regulations. This includes ensuring grid flexibility and stability, integrating new technologies such as battery-storage and electric vehicles, and establishing commercially-attractive business models. Another challenge is to break the link between electricity and water production that is hard-coded into the region’s utilities.

Request a sample report @ https://www.htfmarketreport.com/sample-report/2909324-middle-east-and-north-africa-2

.

MENA region’s GDP to surge by over 3x by 2050

Advertisements

MENA region’s GDP to surge by over 3x by 2050 according to Gulf Capital White Paper as reported by SME10X . In effect, the oil and gas trade revenues allow considerable financial power and a strategic position on the international scene for those exporting countries but also a source of vulnerability for their economies, especially in the aftermath of not only this recent COP26 but to also the ensuing COPs Let us nevertheless look at this prediction of this white paper.

MENA region’s GDP to surge by over 3x by 2050

.

A New report quantifies unprecedented growth opportunities across “Ascending Asia” which is set to drive 40 percent of global consumption by 2040.

Gulf Capital has released a white paper, “Bridging West and East Asia: The Investment Case for Ascending Asia”, that outlines the significant future growth of the Asian economies and the growth in the intra-regional trade and investment flows between West Asia, including the GCC, and East Asia.

The study, jointly published by Gulf Capital and Dr Parag Khanna, Founder and Managing Partner of FutureMap, reveals that the MENA region is expected to increase its GDP by over 3x by 2050, the ASEAN region is expected to grow by 3.7x, and India by 5x. This turbo-charged growth is in sharp contrast to the projected slower growth of the European and US economies at only 1.5x and 1.8x respectively for the same period.

Within greater Asia, the GCC and Southeast Asia are two ascending regions with rising youth populations where demographic and technological shifts will generate a significant expansion of the services sectors. Across these societies, rising affluence and consumption will drive business expansion, corporate profits, and higher valuations. Longer-term reforms including capital account liberalization and accelerated privatization will unlock fresh investment inflows into new Asian listings.

Dr Karim El Solh, Co-Founder and Chief Executive Officer of Gulf Capital, said: “The unprecedented growth opportunities presented by the emergence of ‘Ascending Asia’ have never been greater. The strong macro-economic fundamentals, a growing middle class and youth population, increasing GDP per capita, rapid adoption of technology, and growing intra-regional trade and investment flows will only strengthen the case for the Asian economies. We are fortunate to be investing and operating across Ascending Asia from the GCC to the Near East and Southeast Asia, where we have acquired a large number of companies in the past.”

Additionally, East and West Asia’s deepening trade and investment networks indicate that capital, companies, and consumers will increasingly traverse the Indian Ocean and strengthen ties along the new Silk Roads, stitching the region into a whole greater than the sum of its parts.

El Solh concluded, “Against the backdrop of the evolving megatrends of deepening trade links, sizable FDI flows, greater political cooperation, and the fastest growing consumer sector, Gulf Capital is ideally poised to capitalize on this once in a generation cross-border opportunity. It is our firm belief that if investors want to capture rapid growth over the next three decades, they need significant exposure to the fastest growing industries across Ascending Asia.”

.

Yalla Group Says it has Maintained Growth in MENA Region

Advertisements

Mentor Finance, Benzinga Contributor dwelt on how and why Yalla Group Says it has Maintained Growth in MENA Region with Positive Performance. Let us see that.

.

Image provided by Mentor Finance

Yalla Group Limited’s YALA +0.06%  (Get Free Alerts for YALA) financial performances in the third quarter injected new energy into the company.

Yalla is one of the leading companies in the Middle East and North Africa (MENA) area that has a voice-centric social network and entertainment platform. It operates two core products locally, Yalla and Yalla Ludo. Although the 21Q3 season did not show an exponential growth experienced in 21Q1, the company claims that the overall revenue increase and user expansion were maintained at a better level. “We achieved yet another quarter of strong growth, with good operating and financial performances,” said Yang Tao, founder, chairman, and CEO of Yalla.

Headquartered in Dubai, UAE, Yalla Technology was founded in February 2018. In September 2020, after only two and half years, it was listed on the New York Stock Exchange. Compared to other voice-based social startups, Yalla claims that it has gained more market attention — owing to its geographical location.

Rapid Growth in the MENA Area

As a “follower” in terms of the adoption of mobile internet, the number of mobile users in the Middle East and North Africa demonstrated rapid growth in recent years. According to a 42-page report by GSMA in 2020, the number of independent mobile users in the Middle East and North Africa reached a milestone of 400 million in 2020, representing a penetration rate of 65% of the local population, with statistics that were even higher in some countries.

By 2025, 700 million people will have access to mobile internet services. As digital technology becomes more centered around daily life, more people in the Middle East and North Africa will enjoy the benefits of the Internet and smart devices.

Due to religious beliefs, cultural customs, and other factors in the Middle East and North Africa, in-person leisure activities are restricted, driving up the increasing demand for online entertainment. According to data from Hootsuite in July 2020, citizens in the UAE and Saudi Arabia, respectively, spend 3 hours and 17 minutes and 3 hours and 11 minutes on social media each day, which are both higher than the global average of 2.4 hours per day. By the time of the publication, the penetration rate for online social and entertainment in the MENA area is only 14%, still indicating areas for continued advancement.

In terms of purchasing power, the major countries and regions in the MENA area are comparable to the Western and the Asia-Pacific nations. A report from The World Bank in July this year suggested that the urbanization rate of the Middle East and North Africa countries such as Kuwait, Qatar, Israel, etc., is close to 100%. These cities are highly developed and their resident income far outstrips all the other parts of the region. Thus, users in these areas have a strong purchasing power, providing a solid foundation for the development of local online entertainment products, with Yalla being one of the beneficiaries. 

Glittering Performance 

In the third-quarter earnings report, Yalla achieved a revenue of $71.3 million, a 110.8% increase compared to the third quarter of 2020. Chat service remains as the main revenue source for Yalla, totaling $53.9 million, while revenue from game service was $17.4 million, which mainly benefited from the increase in paying users brought by new products.

The net profit in the third quarter was $25.3 million, with a net profit margin of 35.5%. In comparison, there was a loss of $31 million in the same period last year due to equity incentives and other factors. Overall, the non-GAAP profit margin in the third quarter of 2021 was 46.6%.

In terms of users, Yalla group says it has maintained good growth. The average monthly active users (MAU) of 25.9 million was an 81.9% increase year-to-year compared to the 14.3 million users last year. The number of paying users increased from 5.1 million in the third quarter of 2020 to 7.7 million in the third quarter of 2021, achieving sustained growth for many quarters. Based on descriptions from conference calls, the management believes that the results from a series of marketing activities tailored to the local culture were reflected in the realization of user growth.

In the 21Q3 report, Yalla disclosed the operating data for its new product, Yalla Parchis. Yalla Prachis is a voice-based game platform targeting the South American market. It was officially launched in October and brought in 786,000 MAUs and 299,000 paying users for Yalla Group in the third quarter.

In terms of expenses, Yalla’s total costs and expenses in the third quarter totaled $45.6 million, a decrease from the $64.7 million in the third quarter of 2020. With a continuous expansion of business scale, Yalla believes that its ability to control costs has been gradually improving. Among the expenses, technology and product development expenses were $3.9 million, accounting for 5.4% of the total revenue.

Based on the company’s strategic planning, the management is projecting revenue between $67 million and $72 million for the fourth quarter of 2021. This will be an increase of 38.6% to 48.9%, respectively, from the $48.3 million in the fourth quarter of 2020. It is worth noting that, according to Mr. Tao Yang, Yalla is developing a cutting-edge social application, Yalla Chat, which may be launched as early as the first quarter of next year in hope of becoming the first metaverse social application specifically customized for the MENA region.

Yalla’s current price-to-earnings ratio (PE) is 60.73, which is at a lower range of the industry average, while its price-to-sales ratio (PS) is 4.40, which is down more than half from the historical average of 8.95. The significant drop has given Yalla a certain low valuation attribute. The China International Capital Corporation Limited (601995. SH) covered Yalla for the first time last week and gave it an outperforming rating. It is estimated that the company’s EPS for 2021-23 will be 0.71, 0.77, and 1.01 US dollars, respectively, while the non-GAAP will be 19%.

.