Oil registered the biggest weekly loss in almost 10 months as hopes faded that Opec will be able to implement a promised deal to cut production and ease global oversupplies. Once prices stop climbing, they (most often) correct. With little clarity about specific production cuts, prices initially rose above $50 per barrel but then started to fall. The devil is in the detail. Opec needs to provide more clarity on how the production- sharing agreement would work to bring a price recovery.

Last week, it was reported that Saudi Arabia threatened to raise output if other members didn’t agree to cuts. This was later denied by the Opec secretary general, Mohammed Barkindo. Opec failed on October 28 to agree on output quotas for member countries, which must happen before a deal can be finalised. Certainly the closer we get to an actual decision or no decision on production cuts, market nervousness will increase.

Opec alone cannot cut output to stabilise the market, as it had been warned by Ali Al Naimi, the former Saudi Arabian oil minister who masterminded the market share (pump-at-will) policy that the group adopted two years ago. He said that the situation has changed as other producers, including Russia, were talking to the group about coordinated cuts. The market will be looking at what Opec ultimately delivers versus what is required.

Within Opec, Iraq increased output by 50,000 barrels per day to a record 4.59 million barrels per day and asked to be excluded from the mandated cuts because of its war with ISIL. Libya, Nigeria and Iran, which are exempt from the production cuts deal, pumped an additional 400,000 barrels per day in October.

Saudi Arabia is motivated by its long-standing position to minimise volatility. It wants to prevent both a price collapse and a price spike. It was happy for its policy to gain market share in 2014 take shape, but now it’s more about gradual price recovery. The kingdom does want prices to recover but neither quickly enough nor high enough to encourage non-conventional (shale) suppliers to re-enter the market.

At the core of the new Saudi oil strategy is a realisation that their Opec friends and non-Opec contenders have to be conciliated more than before. The person in charge of this is Khalid Al Falih, the minister of energy. The economy has slowed since 2014, when his processor, Mr Al Naimi, opted for more of a unilateral market forces approach. While the oil price front has to be managed, Mr Al Falih is overseeing the largest part-privatisation through an IPO in history, that of the strategic oil company Saudi Aramco.

There is a widely-held assumption that US shale is economically viable around $60 per barrel. This of course remains to be seen and tested. What we do know is that before the 2014 oil price collapse, US shale output was rising by about 1 million daily barrels each year. It remains to be seen if shale output recovers in tandem with prices. That is the biggest danger to Opec.

Of concern is how much supply is out there and how much can be produced with oil prices below $50 per barrel. Brent finished last week down 8.3 per cent at $45.58, while West Texas Intermediate lost 9.5 per cent to close at $44.07.

International oil companies will probably cut investment spending by about $370 billion this year and next, according to Wood MacKenzie, just as the UAE warned that the massive number of projects being delayed because of the drop in crude prices could lay the groundwork for a future shortage. A shortage is implicitly referring to a future price spike which will be an anathema to Saudi Arabia’s balanced approach.

The global oil industry has postponed a number of projects, raising the risk of a slump in output and a potential shortfall in supply, Suhail Al Mazrouei, the Minister of Energy of the UAE, said recently. The International Energy Agency, for its part, estimates spending in exploration and production fell 25 per cent in 2015 and will decline by the same amount this year, cutting more than $300bn in investment. The IEA does not expect an investment recovery to take place in 2017. There is some logic to the above expectation: oil will have to stay for a few quarters at just above $50 per barrel for many oil majors and their respective boards to decide making an investment decision to expand output. As long as oil keeps on dipping below $50, the longer will firms keep on postponing investments.

However there are those who are forecasting that oil output will match prices and that as oil recovers to $60 in the second half of 2017 from now and to $65 to $70 three quarters afterwards, that there will be enough supply incentives for firms to invest in parallel.

Oil prices will recover, as mentioned in previous articles, but it won’t be a straight upward line as volatility prevails.

We are in a new supply-demand paradigm which requires testing. Saudi Arabia is involved in a delicate balancing act. The hedge fund community still has a strong bullish bias towards oil on the expectation the supply-demand balance will tighten and lift prices during 2017.

Crude prices are likely to remain under pressure in the short term until more of the record net long positions have been liquidated by hedge funds, or until Opec can provide convincing details of how the output agreement will work. Volatility ensues.

John Sfakianakis is the director of economic research at the Gulf Research Centre in Riyadh

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Executive travel: Flying from Sri Lanka to Heathrow in fine style

As the newest member of oneworld – the third-largest global airline group – SriLankan has much to offer the business traveller.

Being part of the alliance means travellers can earn and spend air miles across all the 14 members, which include Qatar Airways, British Airways and Qantas.

SriLankan’s latest A330-300 business class product was launched two years ago on key routes such as the UAE.

My 11-hour, 20-minute journey from Sri Lanka’s Bandaranaike International in Colombo to London Heathrow began with SriLankan’s only branded lounge, Serendib,

Located near the airline’s gate, there’s a food buffet, business centre, relaxation room, views of the airport apron and even an Ayurvedic foot spa offering complimentary 15-minute treatments.

On board, the new premium cabin has a smart and contemporary interior and 27 business class seats, all with aisle access. With a 1 x 2 x 1 configuration, the centre seats suit colleagues travelling together, while the window seats offer privacy for solo travellers.

During the flight, two food services are offered, with the first including tea-cured salmon fillet starters – full of flavour and beautifully presented. The second meal, served a few hours before landing, included roast pumpkin soup as a starter, followed by tikka chicken breast with saffron rice.

For travellers wanting to work, a large folding table and side ­table is ideal for setting up office along with USB and universal power ports. Wi-Fi is a rather pricey US$25 for 40 megabytes.

For those looking to relax, the seats are kitted out with a large high-definition touchscreen with a secondary controller to navigate the system, check on flight progress or play games.

The seats angle away from the aisles and easily recline into a 198-centimetre fully flat bed. A thicker blanket and a mattress protector – something other airlines offer in business – to protect from the leather finish of the seat would have been nice. However, SriLankan offers two linen-covered pillows featuring ornate modern peacock designs.

Passengers flying business also have the airline’s limousine service, which provides a door-to-door service – a great addition to already affordable fares.

Q&A

So how much are tickets from the UAE to Colombo?

Fares are currently on promotion, with business class seats from Dh2,120 plus taxes .The A330-300 operates from Dubai five days a week, and a smaller A320 aircraft flies from Abu Dhabi and Dubai the rest of the week.

Is there a “bid upgrade” system in place?

Yes, all passengers with a SriLankan economy class ticket are able to bid for a business class seat if there is one available. The online bid system, found on SriLankan’s home page, offers suggested bid levels and the strength of their offer. Passengers will find out 24-48 hours before their flight if their bid has been successful, at which point their credit card will be charged.

What amenities were handed out?

Slippers, an eye mask and amenity kits from Crabtree and Evelyn packed with a moistur­iser, lip balm and a refreshing Jojoba oil face mist as well as the usuals, such as a toothbrush. If you only want to sleep, ask for the kit early as this isn’t usually distributed until after the first food service.

The A330-300 offers the new business class. But what of the other aircraft?

SriLankan’s A330-200 aircraft, which fly shorter routes, also feature a fully flat business class, however, these are six seats across, compared with four, and situated in pairs, so offer less privacy. They still offer the same comprehensive in-flight entertainment though.

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'Galaxy, order me a pizza' – Samsung flagship to feature AI assistant

Samsung Electronics said it would offer an artificial intelligence assistant service in the upcoming flagship smartphone as the South Korean firm seeks recovery from its global smartphone recalls.

The Galaxy S8 will let users order food or perform other tasks without going through a third-party application but by simply asking the phone’s virtual assistant, Samsung said. The artificial intelligence service will also be made available in Samsung’s other consumer electronics products, such as refrigerators.

The company declined to disclose what specific tasks the S8 phone would perform through its artificial intelligence feature.

Samsung is expected to unveil the next iteration for its flagship Galaxy device in spring as it has typically done in the past. Sales of the Galaxy S8 will be crucial for the recovery of Samsung’s mobile business, in which its latest quarterly profit was nearly wiped out by two global recalls of the Galaxy Note 7 smartphone. Samsung estimates it lost at least US$5.3 billion as it discontinued the model, which overheated and caught fire.

The company said last month that it has not figured out what went wrong with the Note 7 phones.

The South Korean company joined the race to create the digital assistant service when it acquired in October Viv Labs, a Silicon Valley startup launched by the same entrepreneurs who sold Siri to Apple. Past and current Samsung phones offer a voice assistant service called “S Voice” developed internally, but the feature did not gain much traction.

Samsung’s acquisition of the Silicon Valley firm was seen as its taking another step to seek independence from Google, which offers its brand of virtual assistant service in Android-powered devices.

Executives at Samsung and Viv Labs said that the biggest difference between the existing digital assistant and the one they are jointly developing is that the latter will be an “open AI platform,” meaning that third-party developers will be able to offer their services through Samsung’s AI platform.

“Our Galaxy smartphones don’t provide services that enable consumers to order pizza or coffee, but does provide third party applications. But the new AI platform will enable consumers to do things that they would usually do through a separate third-party application,” Samsung said.

* Associated Press

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What will Buffet buy next with his grand cash pile?

Warren Buffett is sitting on more cash than ever.

His Berkshire Hathaway had almost US$85 billion on its books as of September 30, according to a regulatory filing at the weekend. That is up from the previous record of $72.7bn on June 30.

“He’s got a lot of ammo” for investments, said Bill Smead, who oversees about $2.1bn including Berkshire shares at Smead Capital Management. “Eighty-five billion dollars is a lot of money.”

The cash balance is likely to spark a fresh round of speculation about what the 86-year-old Berkshire chairman and chief executive will buy next. Over the past five decades, he has built the Omaha, Nebraska-based company into a sprawling conglomerate through dozens of acquisitions and stock picks. It now has an equity portfolio valued at about $100bn and subsidiaries that range from Dairy Queen to NetJets.

Operating earnings climbed by 6.6 per cent in the third quarter to $4.85bn, or $2,951 a share, driven by contributions from manufacturing businesses. That missed the average $3,058-a-share estimate of three analysts surveyed by Bloomberg. Net income fell by 24 per cent from a year earlier when Mr Buffett booked a large gain on an investment in Kraft Heinz.

This year, he has bought the battery-maker Duracell and Precision Castparts, a global supplier to the aerospace industry. The latter was one of his biggest acquisitions ever.

Those two businesses pushed profit at the manufacturing, service and retail segment up by 45 per cent to $1.7bn in the quarter. Aggregate earnings fell for the rest of the companies in the group, including chemical unit Lubrizol and toolmaker Iscar, according to the filing.

Some of Berkshire’s other large businesses also struggled in the quarter. The insurance group reported that underwriting profit slipped 34 per cent to $272 million as results worsened at the company’s namesake reinsurance business and auto insurer Geico. Income from Berkshire’s railroad, BNSF, fell about 12 per cent to $1.02bn on reduced demand for coal and petroleum products.

One bright spot was the utility unit, Berkshire Hathaway Energy. It contributed $932m in profit, compared with $786m a year earlier, on higher electric rates and increased wholesale volumes. The business operates electric grids in the UK, natural gas pipelines that stretch from the Great Lakes to Texas and power companies in states including Iowa and Nevada.

Part of the increase in cash during the quarter came from the sale of preferred stock in the chewing-gum maker Wrigley. The transaction was completed in late September and drove a gain of $2.35bn on derivatives and investments. A year earlier, Berkshire recorded a gain of $4.88bn in that area because of an increase in the value of its investment in Kraft Heinz.

Berkshire has said such marks are “often meaningless” and do not help in understanding its performance. Nonetheless, they were responsible for the drop in net income, which declined to $7.2bn in the third quarter from $9.43bn a year earlier.

Kraft Heinz, formed by the merger of two US food giants last year, last week posted third-quarter revenue that missed analysts’ estimates after currency fluctuations and sluggish sales in the US and Europe pressured results.

Revenue for the quarter slipped by 1.5 per cent to $6.27bn, missing analysts’ average estimate of $6.3bn. That shined a light on the company’s struggles to expand sales in a changing market, said Ken Shea, an analyst at Bloomberg Intelligence.

“The lack of top-line growth is the only thing to criticise in this report,” Mr Shea said.

Under the management of private equity firm 3G Capital, Kraft Heinz has slashed costs, following the playbook used to produce industry-leading margins at HJ Heinz before its merger with Kraft Foods. The combined group has closed factories and cut jobs as it pursues $1.5bn in cost cuts amid sluggish sales. The company is ahead of schedule on its savings programme.

Profit excluding some items rose 89 per cent to 83 cents a share, in part because of ­lower taxes and debt payments, the Pittsburgh-based company said.

Not all the $84.8bn in cash at Berkshire is available for investments. Mr Buffett has said that he wants to keep a cushion of at least $20bn. His company is a major seller of reinsurance, a business that requires large payouts after natural disasters and other catastrophic events.

One of the best ways for Mr Buffett to deploy the cash pile could be to purchase his company’s stock, said Jim Shanahan, an analyst at Edward Jones. Mr Buffett is authorised to buy back shares for less than 120 per cent of book value, but the company could adjust that limit.

As of September 30, book value stood at $163,783 per share. Berkshire’s Class A stock closed on Friday at $214,545, or about 31 per cent more than the measure of assets minus liabilities.

Even at that level, the stock “seems really cheap to me”, Mr Shanahan said. “There’s a lot of upside here in terms of earnings.”

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What will Buffet buy next with his grand cash pile?

Warren Buffett is sitting on more cash than ever.

His Berkshire Hathaway had almost US$85 billion on its books as of September 30, according to a regulatory filing at the weekend. That is up from the previous record of $72.7bn on June 30.

“He’s got a lot of ammo” for investments, said Bill Smead, who oversees about $2.1bn including Berkshire shares at Smead Capital Management. “Eighty-five billion dollars is a lot of money.”

The cash balance is likely to spark a fresh round of speculation about what the 86-year-old Berkshire chairman and chief executive will buy next. Over the past five decades, he has built the Omaha, Nebraska-based company into a sprawling conglomerate through dozens of acquisitions and stock picks. It now has an equity portfolio valued at about $100bn and subsidiaries that range from Dairy Queen to NetJets.

Operating earnings climbed by 6.6 per cent in the third quarter to $4.85bn, or $2,951 a share, driven by contributions from manufacturing businesses. That missed the average $3,058-a-share estimate of three analysts surveyed by Bloomberg. Net income fell by 24 per cent from a year earlier when Mr Buffett booked a large gain on an investment in Kraft Heinz.

This year, he has bought the battery-maker Duracell and Precision Castparts, a global supplier to the aerospace industry. The latter was one of his biggest acquisitions ever.

Those two businesses pushed profit at the manufacturing, service and retail segment up by 45 per cent to $1.7bn in the quarter. Aggregate earnings fell for the rest of the companies in the group, including chemical unit Lubrizol and toolmaker Iscar, according to the filing.

Some of Berkshire’s other large businesses also struggled in the quarter. The insurance group reported that underwriting profit slipped 34 per cent to $272 million as results worsened at the company’s namesake reinsurance business and auto insurer Geico. Income from Berkshire’s railroad, BNSF, fell about 12 per cent to $1.02bn on reduced demand for coal and petroleum products.

One bright spot was the utility unit, Berkshire Hathaway Energy. It contributed $932m in profit, compared with $786m a year earlier, on higher electric rates and increased wholesale volumes. The business operates electric grids in the UK, natural gas pipelines that stretch from the Great Lakes to Texas and power companies in states including Iowa and Nevada.

Part of the increase in cash during the quarter came from the sale of preferred stock in the chewing-gum maker Wrigley. The transaction was completed in late September and drove a gain of $2.35bn on derivatives and investments. A year earlier, Berkshire recorded a gain of $4.88bn in that area because of an increase in the value of its investment in Kraft Heinz.

Berkshire has said such marks are “often meaningless” and do not help in understanding its performance. Nonetheless, they were responsible for the drop in net income, which declined to $7.2bn in the third quarter from $9.43bn a year earlier.

Kraft Heinz, formed by the merger of two US food giants last year, last week posted third-quarter revenue that missed analysts’ estimates after currency fluctuations and sluggish sales in the US and Europe pressured results.

Revenue for the quarter slipped by 1.5 per cent to $6.27bn, missing analysts’ average estimate of $6.3bn. That shined a light on the company’s struggles to expand sales in a changing market, said Ken Shea, an analyst at Bloomberg Intelligence.

“The lack of top-line growth is the only thing to criticise in this report,” Mr Shea said.

Under the management of private equity firm 3G Capital, Kraft Heinz has slashed costs, following the playbook used to produce industry-leading margins at HJ Heinz before its merger with Kraft Foods. The combined group has closed factories and cut jobs as it pursues $1.5bn in cost cuts amid sluggish sales. The company is ahead of schedule on its savings programme.

Profit excluding some items rose 89 per cent to 83 cents a share, in part because of ­lower taxes and debt payments, the Pittsburgh-based company said.

Not all the $84.8bn in cash at Berkshire is available for investments. Mr Buffett has said that he wants to keep a cushion of at least $20bn. His company is a major seller of reinsurance, a business that requires large payouts after natural disasters and other catastrophic events.

One of the best ways for Mr Buffett to deploy the cash pile could be to purchase his company’s stock, said Jim Shanahan, an analyst at Edward Jones. Mr Buffett is authorised to buy back shares for less than 120 per cent of book value, but the company could adjust that limit.

As of September 30, book value stood at $163,783 per share. Berkshire’s Class A stock closed on Friday at $214,545, or about 31 per cent more than the measure of assets minus liabilities.

Even at that level, the stock “seems really cheap to me”, Mr Shanahan said. “There’s a lot of upside here in terms of earnings.”

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Economics 101: Greece's crisis is a cautionary tale for a GCC monetary union

economics 101

qWhat is the Eurozone Greek debt crisis, and what lessons does it offer for the GCC single currency?

a In last week’s Econ 101 column, we learnt that when a government struggles to manage its finances, it will suffer inflation and high interest rates, and that one remedy is to join the currency of a fiscally disciplined country. By surrendering control of its monetary policy, the joining country gains credibility, earning lower interest rates.

We also learnt that the downside of a single currency is that when the economy recedes because, for example, there is a financial crisis, unemployment will increase sharply as wages are slow to fall and the country’s currency cannot devalue.

The Greek debt crisis is a perfect illustration of these principles. It also serves as a warning to the GCC countries as they plan their own single currency.

Throughout the 1980s and 1990s, when Greece had the Drachma, the government mismanaged its finances in two primary ways. First, it ran up a large debt (more than 75 per cent of GDP in the mid-1990s). Second, it used that debt to fund public-sector hiring that featured generous benefits, such as low retirement ages, and that was useless, if not damaging, to the economy. As expected, the Drachma’s value tumbled and inflation and interest rates rose to more than 25 per cent.

Just as the music was about to stop for Greece, the EU introduced a fortuitously timed, but ill-conceived, single currency and the European Commission was very keen on Greek membership for political reasons. Greece obliged and in so doing, saw its interest rates fall below 5 per cent. This allowed it to delay domestic reforms and the government persisted with of borrowing to fund an extravagant and ineffective public sector.

After the global financial crisis of 2008, Greece’s lenders began to question its creditworthiness and markets started to differentiate between the different Eurozone government bonds, with Greece’s interest rates shooting up beyond 30 per cent. Government insolvency ensued – this time the music did stop. If wages didn’t fall immediately, then unemployment would rise sharply.

As mentioned last week, wages are stubborn, especially public-sector ones, but a devaluing currency is a good substitute. The single currency ruled that option out but there was the alternative of Greeks relocating to more prosperous parts of the eurozone to ease unemployment. However, cultural barriers, as well as the poor health of the European economy in general, largely scuppered such plans.

A series of bailouts ensued but they were of limited help because they were designed to bail out the private European banks that had lent to Greece. Greek unemployment now exceeds 20 per cent and it will take a long time for the economy to readjust.

The Greek government’s irresponsible spending habits during the past 40 years are the biggest cause of the crisis but the European Commission also played a role by politicising the single currency, which is the mistake that the GCC countries must avoid.

A correctly conceived monetary union involves a series of economic qualifications before entry of a new member as well as automatic sanctions that prevent irresponsible fiscal management by member states. The European Commission established both nominally but overlooked egregious violations because all it cared about was the aggrandisement and empowerment of the central European institutions. Bureaucracies specialise in engineering situations that result in an expansion of their influence and resources, which is why we see former president of the EC Jacques Delors now calling for fiscal union as the “solution”. In the next two weeks, we will expand upon why the EU’s reforms are paving the way for its implosion and why the GCC’s commitment to decentralisation will be critical to the bloc’s continual cooperation – and hopefully to a successful single currency.

Omar Al Ubaydli is the programme director for international and geopolitical studies at the Bahrain Center for Strategic, International and Energy Studies, and an affiliated associate professor of economics at George Mason University in the US.

We welcome economics questions from our readers via email (omar@omar.ec) or tweet (@omareconomics)

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ABU DHABI // Air Seychelles, part-owned by Etihad Airways, will add capacity to Europe and South Africa next year as it works to bring more tourists to the Indian Ocean archipelago.

From March, the airline plans to operate a second Airbus A330, which will fly non-stop to Düsseldorf and Durban, as well as add flights to its key Paris destination.

“The government of Seychelles and Etihad Airways fully support the airline’s plan to develop its European network by establishing a non-stop connection to Germany, a strategically important market, which is currently the second-largest source of inbound tourism after France,” Roy Kinnear, chief executive of Air Seychelles, said in a statement on Friday:

He added that 29,200 people have visited the Seychelles from Germany so far this year, an increase of nine per cent over 2015.

The airline, in which Etihad acquired a 40-per-cent stake in 2012, flew 522,873 passengers last year, a 22-per-cent increase on 2014.

On Friday, the International Air Transport Association (Iata) reported that global passenger demand in September grew seven per cent compared to a year earlier, the strongest increase in seven months.

“This rebound from August weakness suggests that travel demand is showing its resilience in the aftermath of terror attacks,” said Alexandre de Juniac, Iata’s chief executive.

Middle East carriers registered an 11.5 per cent increase in demand in September compared to a year ago, which was the largest globally, Iata said.

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I was made redundant a while ago but have been doing visa runs using my British passport, living off my savings and doing some casual work. I haven’t found a suitable new job yet, but someone I know has offered to let me buy a visa under his company which is based in Ras Al Khaimah. This would allow me to stay in my apartment. However, a friend is concerned this isn’t fully legal. Surely if I have a visa I am not breaking the law? EF, Dubai

Under UAE law, it is illegal to purchase a visa in this way. Residency visas should only be procured for employees of a company or by the owners of a legal entity. Both the individual and the owner of any company who attempts to sell visas in this way can be fined and deportation is also a possibility.

It is also illegal to work on anything other than a valid residency visa, and casual work is not permitted under UAE law. Both the company and any individual who does this are breaking the law and can be heavily fined. An individual can receive a fine of up to Dh50,000 and/or be deported. Individuals may only work for companies who sponsor them. The only exception is someone who is legally employed by a company and on their visa and takes on certain freelance work with the full knowledge and written agreement of both employers.

The Wages Protection System usually spot people in this situation, as the Ministry of Labour expects a salary to go through the system each month for every person who has a visa for a company. While some may be getting away with fooling the system, the ministry will catch up with them eventually, and it has made it clear that it will not tolerate people flaunting and breaking the law in this way.

Do I qualify for a property visa? I own an apartment in Dubai that is now worth more than Dh1 million. My family and I live in it and I have a mortgage. My question is can I apply for a visa for my wife and two children based on ownership of this apartment? AS, Dubai

While it can be possible to obtain a property-related visa in Dubai, the rules are strict and even if someone fits the criteria, all applications are subject to individual approval. A property must have been bought for a sum of at least Dh1 million, and that must be shown on the Dubai Land Registry documents. The current value is not considered and it must also be owned outright, without any mortgage. An owner who applies for this visa cannot be in employment in the UAE as an employment-related residency visa must always take precedence. In this case therefore, AS will not be able to apply for a property-related visa and can only sponsor his wife and children through his own residency visa.

In August 2015 I started working for a company in Abu Dhabi on a two-year limited contract. Now I want to leave and I have already given my resignation and put one month’s notice in the letter. However, the company is telling me that you cannot go after one month and that they will make me stay and work for three months. What do the rules in the UAE say about this? Can they make me stay? SM, Abu Dhabi

Under UAE Labour Law, the minimum notice period required is 30 days, but in many cases a contract of employment may state a longer period, often up to three months and that is enforceable as it has been agreed by both parties. SM is on a fixed-term contract and this affords certain protections to the employee. In return there are restrictions on them breaking the terms of the contract early. In accordance with Article 116 of the law, SM can also be penalised fin­ancially for breaking the contract. This article states: “If the contract has been terminated on part of the employee … the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation may not exceed half a month’s pay for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise”. Therefore SM would be advised to work the full notice period stated in the employment contract.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Expectant – and astute

Vinita Michael is a jewellery designer, launching her eponymous brand last year. In her native India, where she graduated from the National Institute of Fashion Technology in Gandhinagar, she says her creations were picked up by stars from the Bollywood film industry. The 30-year-old, who moved to Dubai four years ago, is married with a three-year-old son and a baby on the way.

q How did your upbringing shape your attitude towards money?

a The importance of saving was instilled in me as a child, but it was only much later in life that I learnt the importance of wisely investing my savings. As a child I was constantly told that property is one of the most secure forms of investing and I believed this for a long time, but experience has taught me that there are other more lucrative instruments for investing your money.

How much did you get paid for your first job?

Straight out of college, I was a junior designer for a reputed jewellery house in India, for which I received an equivalent of Dh1,700 a month.

Are you a spender or saver?

I am a wise spender and a committed saver. You should always have at least two months’ family income in cash kept aside for times of emergency. The fundamentals of a strong financial plan are mandated monthly saving, ensuring that the savings are invested in instruments that provide good growth, and most importantly living within your means. While it is important to save, it is equally important to have a good standard of living. This is possible by having a budget in place for every expense.

What is your most cherished purchase?

A house we recently picked up in our home country. It is a modest two-bedroom but in a great location in Bangalore, India.

Have you ever had a month where you feared you could not pay the bills?

Fortunately not yet, this has mostly to do with strong budgeting and low overheads.

Where do you save your money?

As a rule I save a minimum of 10 per cent of my income into a combination of fixed deposits and mutual funds. I invest primarily in India. This has become easier now because of the availability of platforms that allow us to invest directly into funds while in Dubai. My husband and I also have a certified fee-only financial planner who reviews our plans on an annual basis and helps change our saving strategy as per the market.

Do you prefer paying by credit card or in cash?

Cash – it helps with tracking expenses and living within a budget.

What has been your best investment?

Deciding to register my label, Vinita Michael, in early 2015.

What do you most regret spending money on?

When I have to spend out of carelessness, such as on parking tickets or speeding fines.

What financial advice would you offer your younger self?

Start investing earlier and ensure your money works for you. Compound interest is a wonderful thing, and the earlier you start investing the better your assets will look.

Do you have a plan for the future?

My husband and I have a rather detailed 40-year financial plan. The primary objective was wealth creation, protection and growth. Now that we have protected the immediate assets and the family, our current objective is to save and grow our wealth.

What would you raid your savings account for?

We have accounted for predictable expenses, such as a new office, children’s education and a new car, and unforeseen expenses, such as our demise or temporary disability. Should an unforeseen situation arise, I hope we will have adequate savings to help us back on our feet.

* Sananda Sahoo

The pound is falling, so what’s the best strategy for sending money to the UK? Send a lump sum, hold for now or send monthly instalments? LH, Dubai

Expert 1:

Gaurav Kashyap, head of futures at Axitrader

It has been a year for tremendous event risk for the British pound and this downward mom­entum is set to continue. Volatility will be high through the end of 2016 and the early parts of 2017 and although we will see some bounces in the pound, it will be as a result of relief rallies as the overall sentiment for the currency and the British eco­nomy as a whole remains anaemic.

The data coming out of the UK is starting to show the hangover from the Brexit vote – in the most recent GDP reading, data showed that the UK economy grew only 0.5 per cent in the third quarter, below the previous 0.7 per cent reading in Q2.

The economic impacts of the vote will strain the UK economy and we can expect further weakness in the pound. The currency is already trading at multi-decade lows, at the time of writing the exchange rate sat at 4.48 against the dirham. And we expect to see more downsides in the months ahead. Along with the overall bearish view of the UK economy, the prospects of the US dollar also will put more downside pressure on the GBP/AED. As the UAE is pegged to the performance of the dollar, an appreciating dollar improves our buying power here in the UAE as well – and with the US central bank set to start hiking US interest rates at the turn of the year, this will support the dollar and ultimately the buying power of our dirhams as well. Having said this we must look for another move towards 4.00-4.300 when discussing the GBP-AED exchange rate.

For UK expats in the UAE, this could mean the time to transfer dirhams back to the motherland might not have come yet. Because of the expected downside move, it would prove prudent to wait until the first quarter of 2017. While many may have already transferred at higher rates it’s not all bad news. There are several tools available to hedge, or protect against the market moving lower than your conversion rate.

Let’s assume you transferred £50,000 following the Brexit vote. That would have cost Dh245,000 at the prevailing rate of Dh4.9 to the pound. Since then the pound has fallen towards the current Dh4.50. Although the transfer is done, your cash asset has essentially depreciated 8 per cent (from Dh4.9 to Dh4.5) and you have lost Dh20,000. However, through using derivatives you could have essentially sold a contract for the same value, so even if the pound falls even further whatever depreciation you experience on your physical transaction is covered by the profit generated through the derivative hedge. This tool isn’t to profit from the falling pound – you are just protecting yourself from further falling pound prices. Such derivative tools are readily available here in the UAE. For example, the Dubai Gold & Commodities Exchange, of which AxiTrader is a member, offers a highly regulated British pound solution. But ensure you ask your broker about any potential risks.

Expert 2:

Sam Instone, chief executive of AES International

Although the current exchange rate in sterling is extremely favourable when compared to historic rates across a number of currencies, remember every piece of economic data and news affects currency markets to create a “fair” current price. Because it is completely impossible to predict the future, any advice on timing is tantamount to fortune telling.

It would be prudent to consider any liabilities both here and in the UK before deciding the frequency of sending back money. A lump sum could be a good way to lock in the current rate, which is highly favourable by his­toric standards. However, you may regret sending it all in one transaction if the pound continues to fall. Typically, sending money back home in tranches mitigates this risk, although you need to be mindful of additional charges for a greater number of transactions.

Next question:

I want to invest in stocks and ETFs but keep hearing about this looming stock market crash. I’ve been holding off for a couple of months, so when is it going to happen? TB, Dubai

Every three weeks The National features a reader’s personal finance problem. If you have an issue or want to suggest a solution for another reader’s concern, write to pf@thenational.ae