Archive for the ‘Published pieces’ Category

Somalia’s uphill struggle to restore security

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Obama had a point when he said: “the poverty and violence in Somalia breeds the terror of tomorrow.” Somalia, afflicted with insurgents, piracy and poverty, has become a haven for trouble and terror.  With very little law enforcement and government infrastructure in a country that has lacked central government in its 20 years of conflict, it may cynically be argued that the state, like it or not, is regretfully failing.

Not long ago, when Sharif Sheikh Ahmed took the wheel of the country with a tarnished name around the globe, embroiled in war, displacement, poverty and above all incomprehensible internal conflicts. His mission to transform Somalia into a peaceful, cohesive state had convinced us all that if any of the leaders of the Islamic Courts Union were going to be involved in the process of reconciliation, it would be him. Indeed, the world needs a few optimists.

In his column on the Guardian last week, Sharif insisted that Somalia is not the “failed” state of popular imagination. Acknowledging the existing problems in Somalia, Sharif announced that “significant progress” has been made and that “something can be done” to assist the state. Calling all Somalis to “abandon the defeatist notion that Somalia’s problems are insuperable,” which Sharif argued, would become a self-fulfilling expectation.

At the Foreign Commonwealth Office reception in London last week, Sharif explained that building a cohesive state in Somalia would require reasonable international support. To be fair, Sharif has been deliberately careful with his international intervention discourse. What has been underplayed is the potentially effective security system which international support may supply. Solving Somalia’s problems requires serious action and a genuine assistance to those Somalis who are prepared to collectively join in effort to surpass the militias.

Any international intervention, however, will have meaning, even outside Somalia, and its implications for how Somalia sees itself and how the world sees Somalia are too vast.  Much has been made of the state considering its security best served through controversial friendships and policies that may sometimes alienate the more traditional powers in the region. Perhaps regional tensions are to blame for the paralysis. The biggest challenge for Somalia has been the sense that it is a hopeless case of internal conflicts.  What’s more, it doesn’t help that Somalis themselves feel are in some sort of psychological warfare; and the more external powers interfere, the more the country bleeds. Any interference on African soil is often fraught with difficulty: there is now a general feeling among Somalis that foreign interference is the larger part of the two evils.

Sharif is a refreshing change from the administration Somalia has had for the past 20 years and his diverse background may actually give him aptitude of healing divides rather than creating them. Yet, we cannot expect him to repair the titanic damage which his predecessors have perpetrated within Somalia itself and around the globe. The seemingly impossible task of restoring stability in a country entrenched in perils will prove difficult, to say the least. How Sharif bridges the demands of the law with the pressures of politics will tell us much about him. And because every act performed by the militants has become his responsibility he has no time to dither.

There is an incongruity here. Viewed from the outside, the sphere looks darker than ever for Sharif. The reality is that Somalia has no way of functioning in a dysfunctional political order and tensions beneath the surface have a habit of ultimately setting off into violent outbreaks. Seen from the inside, things may be looking up.  It was only after the collapse of the army and security institution that civil war began in Somalia. In light of this Sharif has said that plans of a strong security institution will guarantee the prevention of sedition and war. And in fact what matters here is power. Security is important if it brings influence. For Sharif, the real issue is reconciling the competing factions and disarming the militias. It may be a while before Somalia is able to stand but international intervention, Sharif believes may be the vehicle to get the country back onto its feet at least. Only time will tell, but if Sharif is able to restore some sense of security in Somalia, he will have succeeded where numerous others have failed.

Published at: Raxan Reeb


Written by Magda M Ali

March 16, 2010 at 10:02 pm

Posted in Published pieces

Strong pound harms investment returns

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Investors in overseas investment funds have seen their returns harmed by a strong pound, according to figures from Interactive Investor.

The financial website’s research found that investors in an American fund would have lost over 5 per cent, despite a 9.3 per cent market return year-to-date. This is because of an increase in the strength of the pound against the US dollar.

“Sterling has benefited from more positive market sentiment and a return of risk taking. The dollar, which is typically seen as the safe-haven currency, has fallen as US investors invest a larger proportion of their cash holdings overseas.” said Rebecca O’Keeffe, head of investment at Interactive investor.

The research also revealed that a sterling fund based on the Nikkei would have returned, on average, minus 3.2 per cent despite the index being up to 16.9 per cent year-to-date.

“While in the past asset allocation and market timing have always been the focus attention for investments, the recent volatility of currency markets has become an increasingly important factor for investors to consider,” says O’Keeffe.

European investment has also suffered, with equity returns of 9.4 per cent turned into minus 3 per cent as a result of currency moves against the Euro. The Nasdaq return of 20 per cent in 2009 would actually be less than 9 per cent for a sterling investor, the research found.

“Investors would sacrifice the interest differential between sterling and the domestic currency of the index,” says O’Keeffe. “If sterling were to fall, as it did for much of last year, then investors who are unhedged will receive a double benefit if equity markets rise.”

It is not enough to simply be concerned about what the equity market point is but investors should be aware of sterling and its possible currency moves, warned O’Keeffe.

Published in the Financial Times

Written by Magda M Ali

February 17, 2010 at 9:25 pm

Posted in Published pieces

Stamp duty loophole investigated

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Stamp duty avoidance schemes that claim to save homebuyers tens of thousands of pounds are under investigation by HM Revenue and Customs (HMRC).

Using concessions granted for Islamic mortgages, some tax websites claim there may be a legal way of avoiding the stamp duty land tax that adds £20,000 to the cost of buying a £500,000 property.

The schemes under investigation use rules intended for shariah mortgages, which must comply with Islamic principles forbidding the paying or receiving of interest. With a shariah mortgage, banks buy a property on behalf of a client, and receive rent rather than interest. At the end of the “lease”, ownership of the property is transferred to the client, but no stamp duty is paid, as the purchase has not been “substantially performed”.

A spokesman for the HMRC said: “We are aware of this scheme and are investigating its use. We are determined to ensure a fair and level playing field in which everyone pays the tax that parliament believes it has legislated for.”

Tax experts warned that any stamp duty loopholes are likely to be closed. “There is the very strong probability that the law will be changed so that their planning idea will be stopped,” said Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants.

Lakshmi Narain, tax director of Baker Tilly, said shariah mortgages were not intended to offer any tax advantage.

Published in the Financial Times

Written by Magda M Ali

February 17, 2010 at 12:00 am

New way to measure value of money

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The traditional approach to private wealth management is ‘misguided’ and retail investors should adopt portfolio optimisation techniques used by institutional investors, according to a new report from a European equity house.

The study from EDHEC-Risk equity management found that while private clients are routinely asked all kinds of questions about their current situations, goals, preferences and constraints, the resulting service and product offering most often boil down to a rather basic classification in terms of risk profiles with no link to the recommendation.

The study suggested that by using asset-liability management (ALM) advisers could ensure private wealth managers are able to offer their clients investment programs and asset allocation advice that improves the probability of meeting their individual objectives.

It said taking an ALM approach to private wealth management generated two main benefits, the first of which was better asset class selection, the second being better risk definition.

Lionel Martellini, scientific director at EDHEC-Risk and one of the co-authors of the study said: “The proximity to clients is often seen as the raison d’être for private wealth management. Yet when it comes to tailoring an investment strategy, investment advice often comes up short because it does not really take into account the private client’s true objectives.

”Obviously, one should not manage money in the same way depending on whether the client is planning to use the money to prepare for retirement, to purchase a real estate property or to pay for the kids’ education. Failing to properly account for what the money is needed for leads to misguided private asset management advice.”

Published in the Financial Times

Written by Magda M Ali

February 16, 2010 at 11:58 pm

Trendspotter: Intricate tables

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Designers concerned with sustainability are refashioning the concept of “less is more” to “more from less”.

Take, for example, the striking 4foldlow table (pictured right) designed by George Rice for Formtank. Like the entire 2d3d group of tables to which it belongs, it has been reverse-designed from a standard-sized sheet of steel in order to optimise yield. Its sophisticated concept traces its roots to the Japanese art of origami. This design approach bears eight tables from one sheet of steel and limits waste to just 3.5 per cent overall, while the intricate forms create the illusion of there being more metal than there actually is.

Meanwhile, a stunning new collection of tables, the Lazerian “Mensa” designs by Liam Hopkins and Richard Sweeney, uses birch plywood components to support glass tops. Thin pieces of plywood are sculpted using a router controlled by a computer. The curvature of the plywood base is reminiscent of a basketball net and the filigree design appears impossibly fine to be able to support the weight of the top. Lazerian will launch the collection at 100% Design in London this month.

Published in the Financial Times

Written by Magda M Ali

January 16, 2010 at 10:56 pm

Terra: Tales of the Earth

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In Terra, Hamblyn fuses history and science to explore the relationship between the earth and its inhabitants. The book is in four key sections – earth, air, fire and water. In each he explores a historical disaster through first-person accounts: the Lisbon earthquake of 1755; the European weather panic of 1783; the eruption of Krakatau in 1883; and the Hilo tsunami of 1946.

Hamblyn muses on the earth’s deep connections: each of these events was precipitated by another natural disaster – a volcano caused both the tsunami and the strange weather, for example. These testify to the planet’s energy, but is life on earth sustainable in the face of such devastation? Searching for an answer, he wonders why humans are unable to learn from past catastrophes.

Despite fascinating material, at times Terra reads as a stream of blurred facts rather than a sustained narrative or argument.

Published in the Financial Times

Written by Magda M Ali

January 16, 2010 at 10:54 pm

Investors over exposed to UK stocks

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Nine out of 10 independent financial advisers have said investors are over exposed to the UK stock market, according to Ignis Asset Management.

The survey of 180 advisers in late August revealed almost half thought investors were ’definitely’ over-exposed to domestic equities. Forty-two per cent admitted investors were ’probably’ over-exposed.

Jonathan Polin, director of Ignis Asset Management, said: “Investors traditionally have a home bias when choosing funds but it is startling to discover that so many advisers believe UK investors are over-exposed to UK equities.

“It is clear that investors need to rethink their strategy and seriously consider whether their existing asset allocation is likely to deliver the performance they need in order to meet their retirement objectives.”

Meanwhile, 58 per cent of advisers said they did not believe we are in a bull market, with just 5 per cent saying we are ‘definitely’ in a lasting bull run.

The study suggested that advisers ‘bearish’ views were reflected in their gloomy predictions for the UK stock market for the remainder of the year. The majority predict that the FTSE 100 will close the year below 5000, slightly under its current level. Over half believe the FTSE 100 will close 2009 between 4500-5000, and a further 26 per cent predict a close of between 4000-4500.

”After such a tough period for us all it is encouraging to see that advisers are feeling fairly bullish about their business levels, if not about the UK stock market,” added Polin.

“Investors are clearly recognising the value of advice and seeking help when making decisions that could have a serious impact on their future.”

With UK equities set to disappoint in the short term and current asset allocation levels failing to close pension shortfalls, advisers were asked their opinion on how best to help solve the looming retirement crisis.

The research suggests that greater emerging markets exposure will help solve the pension’s crisis, as 83 per cent of advisers believe that greater exposure to emerging market equities is likely to play a key role in closing pension deficits, while 73 per cent admitted they typically allocate less than 10 per cent to the sector.

Almost a quarter of advisers said they allocated 11-15 per cent to emerging markets and a further 3 per cent allocated 16-20 per cent.

The research also demonstrates that the areas to which advisers may allocate a greater percentage in the future to include Asia Pacific, emerging markets and the US, which are the three sectors IFAs expect to perform best over three and five years.

“The fact that advisers expect business levels to rise over the coming months is further proof that investor sentiment is improving,” said Polin.

Published in the Financial Times

Written by Magda M Ali

January 6, 2010 at 11:23 pm

Posted in Published pieces