Recently, we spent time in Abu Dhabi, UAE, at ADFW, which stands for Abu Dhabi Finance Week. While there, we had the opportunity to meet some of the most influential leaders in the finance world, many of whom are connected to the crypto space. They generously shared their insights on the evolving landscape of finance in the MENA region and discussed the trajectory of Web3 in 2024. In a quick conversation, we delved into the future of crypto with Kevin O'Leary, also known as Mr. Wonderful, as he shared his perspectives on the MENA region, M2 Crypto Exchange, and the overall future of cryptocurrency. Following that, we explored how Binance is navigating its latest developments with the SEC, delving into their NFT strategy and why, despite having 120 million users, they consider this number relatively small. Moving forward, we gained a firsthand perspective from the leader of eToro on how their trader ecosystem is flourishing, with crypto leading the way. Lastly, we had a conversation with Dr. Karim El Solh, the CEO of Gulf Capital, an investment firm boasting 16 years of experience in the MENA region. He provided insights into industries he believes are most susceptible to technological disruption in the coming years. Tune in for more!
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Evolving The Finance Areas At The Abu Dhabi Finance Week With Binance, Kevin O'Leaery, eToro And Gulf Capital
We spent time in Abu Dhabi UAE at ADFW, which stands for Abu Dhabi Finance Week. While we were there, we met some of the biggest leaders in the finance world who had ties back to the crypto space. They shared their insights on the evolving areas of finance, the MENA region, which stands for Middle Eastern and North Africa, and where Web3 is headed in 2024. We'll jump into the quick conversation we had with Kevin O'Leary, AKA Mr. Wonderful, and his takes on the MENA region, M2 crypto exchange, and the future of crypto. We'll then discuss how Binance is navigating its news with the SEC, its NFT strategy, and why 120 million users are still a small number.
Next, we'll get a first-hand perspective from the eToro leader on how their trader ecosystem is booming with crypto helping to lead the way. Lastly, we'll talk to the CEO of an investment firm that has years' worth of experience investing in the MENA region and the industries he believes are the most vulnerable to technological disruption in the coming years. Step away from your PCs and dive headfirst into the edge of innovation where you are player two and this is the Edge of NFT. Press start.
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We are here with one and only Kevin O'Leary. We meet in Abu Dhabi of all places. Let's get your thoughts. What's going on in this region that gets you excited?
One word, growth. There's no place like this. What place on Earth is growing this fast and is tracking this much capital in so many sectors? If you don't know about this, you're crazy. This is why so many people are here. This is, for me, number one in the new digital economy, digital payment systems, and also in AI investment because they have real commercialized use coming out of here so I'm very interested.
Also, you are supporting M2. What made you excited about that?
Are they lucky or what in their timing?
It’s the perfect time to launch. I spoke to the CEO.
Stefan, when I met him first, I said, “How are you going to get market share from FTX and Binance?” Problem solved, they both went to zero on their own. That's incredible. The only thing left is him.
I have to say there are a lot of rising exchanges and L1s that position themselves for the next bull run. You're pro-crypto and are more regulated.
I'm pro-crypto and digital payment systems. The trouble with the other exchanges is they don't have the financial backing M2 has. M2 is backed by massive financial institutions with unlimited collateral but also the compliance platform that lets me invest without the risk I had and the mentioned names earlier. They didn't do it the right way. These guys have figured it out. They're going to do it the right way and I want to be part of it. I'm buying the Phoenix shares because they own 30%.
Fair enough. Thanks, Kevin, for your time.
You got it. Thank you.
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I am in Abu Dhabi at the Abu Dhabi Finance Week 2023. It's been an eventful few days. We're all tired. There's been a lot of fun events including yours. I'm here with Alex Chehade, who's the Executive Director and General Manager of Dubai for Binance UAE. It's a pleasure to meet you and get to know you over the past few days and what you guys are up to in the region.
For our audience at home, a little bit about Alex's background, he has many years of experience in finance, including several years dedicated to operations and training, which has been focused on digital assets since 2016. He's passionate about the space and has built a career based on high-tech organization leadership worldwide, strategy, innovation, team development, and finance. He's overseeing corporate currency ecosystem expansion including Web3 and Metaverse. It's important for us to start the conversation with the news. There's been a resolution to the financial relationship with the US government SEC. I'm curious. What does that road forward look like?
We have certainty so we can plan for the future. With certainty, it's easier to plan businesses. Richard is taking the helm. He's a fantastic leader and he's the right guy to lead business with great regulatory experience and crypto experience so a perfect candidate to lead us forward. We're looking forward to driving adoption and building the Web3 economy.
Binance has been a leader in the technological advancement of the industry through a lot of different avenues. Now that the coast is clear, you all can launch all these exciting projects. I'm curious strategically. What's that road map look like? We've gone from a place of NFT being a shiny object. Everyone enjoyed trying new things and experimenting. How do you see NFT strategically fitting into the broader adoption economy? How is Binance looking at NFTs from a use case perspective and infrastructure perspective?
The use cases for NFTs are being explored more. It was just a shiny object. They didn't understand how to utilize it. You are seeing non-fungible real-world assets as NFTs for a use case and then we are seeing engagement with clients as another great use case, like Nike engaging with their community, NFT drops, tagging, and real-world sneakers with NFTs. It's helping drive their customer satisfaction. We're a customer-focused company as well so we also are looking at ways to engage for consumer behavior.
We work with consumer behavior, be able to airdrop things to clients, and be able to notify people. We've also got a Web3 wallet, which starts to interact with the economy, engagement, and digital identity. People are using avatars as well. We see a bright future ahead for this product. We're an innovative company. We love to innovate. Whatever is establishing themselves, we'll be there doing it.
There are a lot of interesting NFTs of traditional token economies coming up with listing opportunities. Are there any particular projects that touch on the NFT world that have been listed by Binance or that you guys have announced?
We've not done anything too drastic of late. At the moment, the leaders are traditional businesses that are exploring. All traditional businesses prefer the narrative of Web3. Everyone's looked at the companies that embrace the internet and are still around and the leaders so the narrative of Web3 resonates with existing businesses. They're still experimenting with their NFTs and use cases that we mentioned but it's yet to pan out. It's still early. It's still experimental.
Speaking of experiments, in my time in the UAE, I've been impressed by how the government has embraced experimentation, whether it's virtual worlds. They're here. There's a demo of mediation in the Metaverse. What's your perspective on the ground here in this region in terms of the adoption of cryptocurrency and NFT technology? How is that different than other regions?
There's a specific drive from this country and all the Emirates to diversify away from fossil fuels and build new emerging economies. PwC has given us some numbers about $20 billion of additional GDP for embracing blockchain. The Dubai government established a blockchain strategy in 2016. They've been moving that for these years into blockchain. They've given certainty to businesses to attract them. They attract companies like Binance to the region and you've seen all the other companies that are here that have been attracted to the region for this, and then you get the network effect of everyone being here, sharing ideas, and developing blockchain and Web3.
Exciting times ahead. Take a step back. You have a global set of users. I don't know what the recent numbers are. You can tell me that in terms of folks using your platform. I'm curious how those demographic trends are adjusting in terms of the age and background of your users. Are we at a point where this is a tipping point? If not, where do we go next?
I believe we have 160 million users globally. The demographic is, as you'd expect, young, tech-savvy, and slightly more male than female.
It's changing.
We have a lot of senior leader women in Binance. Going back because it's experimental and new, the younger demographic meets that. That's why in the region here, there's a slightly younger demographic and that's why we are looking to lead development.
It sounds good. Any closing thoughts? Anything on the Binance roadmap that you're particularly excited about coming up in the next few quarters?
New products continue to innovate, protect users, and grow the market. It's still small. We're in crypto, NFTs, and blockchain. We live and breathe it.
The 116 million, compared to the global population, is still small. You all have the biggest user base in the world. You have ways to go.
Social networks are much bigger. It's a long way to go so I'm looking forward to the journey.
Thanks, Alex. I appreciate your time.
Thanks very much.
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I am in Abu Dhabi. It's our first time being here. We're excited to be here for the ADFW event. It's lively out there and I'd say a lot is happening in the region. I'm pleased to be here with Ben Laidler at eToro whose firm had a huge announcement. We're going to get to know each other and talk a little bit about that. Ben, it's great to have you in the show.
Thanks for having me. It's great to be here.
Just a little bit of background for you folks at home about Ben's background, he's the eToro Global Market Strategist. He's had many years of global investment research experience including roles at several different places including HSBC in New York and JPMorgan. Prior to that, he had a position as CEO independent research firm, Tower Hudson, in London. He's here joining us from London for this event.
Thank you.
To keep things off, tell us a little bit about why you chose to be part of eToro's Journey. Sharing a little bit of my history, I am familiar with you all launching back in the day with the relatively ambitious goal of bringing compliance and regulation to new asset classes, including cryptocurrency. That's happened since then. What made you join the fray?
I used to say I spent 25 years on the institutional side and then I'm on the retail side. The attraction is the growth, to be frank, where I put 34 million users in 100 countries so global, all asset classes, crypto, stocks, FX, commodities, and ETF. That's the attraction, a growing business across the world, all asset classes. We help retail investors on their investment journey.
As I mentioned a little bit for shadow into our audience, there was some big news that was dropped at a little bit of a ceremony here at the event. Can you share a little bit more about that news and what's going on with the platform?
We've got an investment license essentially for the UAE. We're in 100 markets. We have 34 million registered users. We have a license here. Hopefully, we can go out, get more users, and be more useful to clients in the region. It speaks that forward for us. It's a region with a lot of potential. Regulators are making a lot of effort. There's a lot of growth and we hope to be part of that.
Do you have a big team here visiting from all over your different offices for this occasion?
It's pretty huge. For those of you who can't see, we have a massive booth outside full of not only eToro people but also a lot of people from our popular investment program.
I've met some of them and they're excited too.
Not to go off script too much but one of the unique products that we have is you can go on to the platform, find an investor on the platform that you like that has an interesting strategy and has a good track record, and copy them.
I met someone, one of your investors.
There we go. We bring most of you already. You follow them for the investment journey. You copy exactly what they do at the same time and price. It's pretty normal. It's fairly unique to us and we have a lot of them here.
It's a good way to dive in without having to learn everything from scratch. It does democratize investment opportunities. Doing that for this region is going to attract a lot of busy folks who want to get involved on the retail side. It makes sense. What's your general perspective on the economic development happening in this region? This event is a good indication of the vitality of the region. I've heard that there was a much lower decline in economic value in the markets here relative to the rest of the world over the last couple of months. What are you seeing?
That's right. The region had a good slowdown. The global economy is slowing and the Middle East is slowing less. They came into this with not very much of that current account. They've been diversifying trade investment and the economy for so many years. That's to help them out. Looking forward, 2024 is going to be a better year. It will be one of the few places in the world growing over 4%. With interest rates being cut, the biggest sectors here like banks and real estate should do very well. There's a lot more than that. We're a financial services event. We've just got our license. There are a lot of asset managers moving to the region, like the big FinTech culture building. There's an awful lot going on here on renewable solar and nuclear. It's pretty dynamic.
Do you have any thoughts on trends specifically around cryptocurrency companies that you guys are working with that you're excited about that you could share? We're in this general bear market but there's a lot of building going on and a lot of interesting higher-quality companies coming out of this bear market. Any specifics there that have your attention?
I'm the investment guy. By far, the best asset class in the world in 2023 was cryptocurrency, which has been a huge reminder.
That was a big deal when people were talking about how that market and potential were suffering.
Crypto winter last 2022 has become a 120% rally in 2023, which is twice what you made in big tech. That has refocused people's attention a little bit. I was in one of the presentations here earlier with Jenny Johnson, who's the CEO of Franklin Templeton, which is one of the biggest asset managers in the world. She spends 30% of her time dealing with tech disruption and that caught my ear. That's a lot of time and she's spending it because she's afraid there is more tech disruption going on, whether it's blockchain, AI, or whatever it may be that we've ever seen. That's forcing people like this to pay attention and dedicate their time. That's symptomatic of how exciting a lot of these trends are.
A lot of industries are ripe for disruption. It's ubiquitous. Are there any particular industries that you think are more likely to be disrupted by this type of technology that you mentioned?
I don't think there's an industry that is not vulnerable to disruption. Every industry is vulnerable to disruption. The issue is, within all these industries, how you're handling it, whether you're open to it or it sounds like Franklin Templeton whether you're dedicating the time and recognizing that I could be disrupted out of existence. I look at public market companies.
If you look at the largest public magnificent seven tech stocks, they weren't here several years ago, and the whole different stocks, which we don't talk about because they're not the biggest stocks anymore. A) The disruption is constant. B) It's faster than ever. Regardless of the industry, I would say that either people are embracing the disruption or people are hiding from it. If you're hiding from it, you won't be here in ten years' time.
If you’re hiding from disruption, you won't be here in 10 years’ time. Click To Tweet
Speaking of trillion thoughts, you've been in investment management for a long time. A fun question that came to mind is if you could go back to your younger self, any investment advice that you would have given yourself 25 years prior to starting your career?
Get started. What I mean by that is investing rewards time in the market, not timing the market. It's said the compounding return is the eighth wonder of the world. The advantage retail investors have is they tend to be younger. The average age on our platform is about 30. It's about a decade younger than traditional finance. They tend to be digitally native so they tend to be open to technology and cryptocurrency. That's set them up very well. That would be my advice. Just get started.
What about from a portfolio management perspective? You hear all these different theories on how much diversification is in cryptocurrency and other non-traditional assets. I've heard everything from no more than 1% or 2% of your portfolio unless you're in the industry to looking at the facts like crypto being the best performance and a little bit more liberal across asset classes. What's your theory on diversification? Where do you draw those lines?
Diversification is good. You need to be diversified. What's interesting about now is there are more products that enable you to do that than ever before and they're cheaper than they ever have been so frankly speaking, there's no excuse. What's also interesting is crypto is not as risky as it used to be. The volatility has come down a lot. It's a risky asset class but it's not as risky as it used to be.
We usually see stocks move North and South pretty quickly in the past few years too.
It's in all asset classes. You need to be diversified. It's easier and cheaper now than ever. Our copy product is essentially a diversification product.
Are you seeing trends in terms of how much more exposure folks are taking to cryptocurrency in your platform?
Retail investors have a lot of crypto exposure already, which in some ways is natural. The ages younger are not retiring for 40 or 50 years. They can be more risk-tolerant because they're not about to retire. You see that reflected in the high levels of tech ownership and the high levels of crypto ownership.
I appreciate this time to chat. Congrats again on putting your footprint in this region in a major way. If folks want to learn more about eToro and what you're up to, where do you suggest they go?
eToro.com. There are a bunch of tools and education there.
Thanks a lot, Ben. I appreciate your time.
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I am here at Abu Dhabi Finance Week and I have the incredible opportunity to talk to Dr. Karim with Gulf Capital. They're doing some incredible things. We talked and he provided some incredible insights. Dr. Karim, how are you doing?
Very well. Thank you for having me.
First, I want to tap into the Gulf Capital. What are some of the investment thesis that you have? How's it been involved as MENA continues to evolve?
We're the oldest and largest private equity firm in the region established in 2006. We're launching our fourth wide fund. We manage about $2.5 billion and are very focused on control by us and the Gulf. Not only in the Gulf. We're also pushing in Asia to open an office in Singapore. We're taking our companies from the Gulf to the rest of Asia connecting the two regions, which are the fastest-growing regions in the world. We are becoming more about Pan-Asian investment as well.
Earlier in 2023, we got the opportunity to go to South Korea and Singapore. Even being here, seeing just the excitement around the opportunity to invest in a lot of emerging markets and seeing things adjust post-pandemic. How have you seen that adjustment pan out? Where do you see things going as we head into 2024?
The growth in the region is phenomenal, especially post-pandemic. It's impressive. You saw Saudi Arabia grow 8.7% in 2022 and Abu Dhabi at 9%. The momentum is very normal. We're feeling it in our portfolio companies. Most of our companies had record profitability in 2023 where they're growing the annual profit at 17% in the last few years. We're very impressed with the growth and momentum. This region is taking off. You saw it in the Saudi expo right after the World Cup 2024. You can feel this is a region on the move going places.
It's a lot of excitement. It's cool to see so many different events happening as well. It had a lot more reasons for people internationally wanting to come to this region and explore. Throughout your portfolio, you have all kinds of different things that you've been looking at. What are some of the different sectors that's been grabbing your attention?
We're focused on five priority sectors, which are themes for fund 3 and fund 4, namely tech and FinTech, healthcare, business services, consumer, and sustainability to investors in clean water, food security, and energy transition. These are all very exciting sectors growing double digits.
We'll continue to go. We are big FinTech people and love to see how things are continuing to evolve. As we wrap up, we always like to ask a fun question. With all the information that you have, if you give peace of wisdom to yourself when you're first starting your financial journey, what would you tell yourself?
One thing we've learned is that the more we travel and the more global our companies are, the more valuable they are and you reduce single-country risk. Big is beautiful. We didn't do a deal where I put all my eggs in one basket in one country. People are surprised that Gulf Capital portfolio companies operate in 65 countries around the world. We build global leaders from this region. We want to back management that travels well and that can internationalize our companies. Often, the first destination is we look to Asia to expand there. Building global platforms and traveling well are important.
That's a great takeaway. I even learned that in my journey as I get to explore the world more and see what's out there to keep diversification. For all those who are reading, what are ways that they can learn more about Gulf Capital and find ways to get involved?
We have our website, GulfCapital.com. We're on LinkedIn. We talk about our investment strategy, portfolio companies, and priority sector so they can learn about us there.
I appreciate you, Dr. Karim. Everyone, make sure you go check them out.
Thank you for having me. Take care.
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Important Links
- Kevin O'Leary
- M2
- Binance
- eToro
- Gulf Capital
- LinkedIn – Gulf Capital
- iTunes – Edge of NFT
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