UAE investment in Indian-administered Kashmir a ‘complete betrayal’
News of the Emirati property company Emaar investing in Indian-administered Kashmir has been branded a “complete betrayal” by activists and Kashmiris in the region and abroad.
Many believe Kashmir is set to meet a fate similar to Palestine’s, with some Arab and Islamic countries withdrawing their support for the Muslim population’s cause in order to build better economic and diplomatic relations with India.
In March, Emaar’s chief executive in India revealed plans to build a shopping mall and an office complex in Srinagar, capital of the Indian-administered Jammu and Kashmir region. Amit Jain said that the investment worth $60m would generate around 7,000 to 8,000 jobs.
Speaking on behalf of the Indian government, Lieutenant Governor Manoj Sinha said the announcement marked a “historic day” for Kashmir and that “business leaders from the UAE have been invited to invest in J&K and become ‘partners'”.
The Kashmir region is divided between areas administered by India, Pakistan and China and has been fought over since the partition of India by the British Empire in 1947.
The Indian government stands accused of thousands of gross human rights violations and extrajudicial killings in the region, with allegations of brutally suppressing a decades-long freedom struggle by Kashmiris.
Indian soft power
Kashmiri rights campaigner Ershad Mehmood, executive director at the Centre for Peace, Development and Reforms, based in Islamabad, told Middle East Eye: “I am in absolute shock. This is a complete betrayal of the people of Indian-occupied Kashmir and their struggle.
“They shouldn’t have done this. This completely strengthens India’s stance, it recognises Kashmir as Indian territory and completely whitewashes our struggle,” he said. “The UAE has just sent a message to the people of Kashmir that it doesn’t care about their rights and aspirations.”
‘The message India is trying to convey to the Kashmiris is that nobody is with you – even the UAE is investing with us’
– Altaf Hussain, Kashmir Institute of International Relations
Another campaigner, Altaf Hussain, who manages the Kashmir Institute of International Relations, said that “the message India is trying to convey to the Kashmiris is that nobody is with you – even the UAE is investing with us. They want to project this as a negative impact on the Kashmiri struggle”.
Hussain emphasised that there was no peace in Jammu and Kashmir and that India “has on its hands a long list of human rights violations”.
Emirati investment in Indian-controlled Kashmir is an example of Indian soft power and a warning to the Arab world, said Fahim Kayani of Kashmir Campaign UK.
“India has made big inroads in Gulf nations… so now if the UAE has shown interest in investment in Kashmir it’s because of the so-called soft power of India in the Arab world,” Kayani told MEE.
“This is a big issue not just for Muslims but for humanity, as India is ruled by an ideology that does not see non-Hindus as equals. Better the Arab world understands it sooner,” he said.
Indian human rights violations in Kashmir have made international investment highly controversial.
Just after Emaar’s announcement last month, UN Special Rapporteur Mary Lawlor appealed to the Indian authorities to stop the latest attacks on human rights activists in Jammu and Kashmir.
Referring to the recent crackdown by Indian authorities on a coalition of civil society organisations, Lawlor said: “The Jammu and Kashmir Coalition of Civil Society carries out essential work monitoring human rights. Their research and analysis of human rights violations are of huge value, including to international organisations seeking to ensure accountability and non-repetition of abuses.”
India is also in violation of UN resolutions on holding an independence plebiscite in the region and the withdrawal of 600,000 Indian soldiers currently based in Jammu and Kashmir.
Andreas Krieg, associate professor in Security Studies at Kings College London, says the UAE-India relationship is deeply strategic for both countries and therefore courting controversy by investing in Kashmir comes with negligible reputational damage.
“The UAE set a trend with moving early and recognising Israel. They thought that by the time the rest of the Arab and Muslim world comes around to recognising Israel, the UAE would have established strong relations with Israel and would act as an agent of sorts, therefore consolidating its position as a regional power. That’s what they’re doing with Kashmir and India,” Krieg said.
“Both India and the UAE are in each other’s top three trading partners. The relationship has fast become very strategic. The UAE is advancing its interests in India through the building of relationships based on trade, investments and corporate interests.”
However, this is not the first time the UAE has courted controversy over Kashmir. In August 2019, after India repealed the famed Article 370 from its constitution, taking away Kashmir’s special status, the UAE did not condemn the action.
Kashmir’s special status allowed the local government to make its own rules relating to permanent residency, ownership of property and fundamental rights. By taking away Kashmir’s autonomy, critics suggest, the Indian federal government is trying to change the ethnic makeup of the region.
“By allowing unchecked migration into Kashmir, the Indian government wants to change the ethnic makeup, in case there is a plebiscite in the future. The Kashmiri vote for independence from India would be greatly weakened,” said Hussain.
Just days after the UAE refused to condemn the decision, Abu Dhabi conferred the government’s highest civilian award on Indian Prime Minister Narendra Modi.
“The UAE is fully aware that Pakistan would be unhappy with its posturing towards India, but the UAE is setting a new trend of leading the way and wants to become a middle regional power,” Krieg said.
“It has calculated the reputational damage this will cause in the Muslim bloc and with Pakistan, but it reckons the damage will probably be minor.”
The UAE’s decision to become the first foreign investor in the region has been met with only a muted response from Pakistan, Pakistani-administered Kashmir and the broader Muslim bloc.
Traditionally, news of this nature would evoke automatic calls of condemnation from regional and Muslim countries, with Pakistan threatening to raise the matter at the United Nations.
Middle East Eye approached both the Pakistani foreign office spokesperson and the president of Azad Jammu and Kashmir for comment but did not receive a response by the time of publication.
MEE was told by the secretary to the president of Pakistani-administered Kashmir that “the president is thinking about your request for a statement or an interview”.
GM, POSCO Future M to boost investment at battery materials plant in Canada – The Globe and Mail
General Motors Co GM-N and South Korea’s POSCO Future M said on Friday they will invest more to boost production at their chemical battery materials facility in Canada, taking their estimated total investment in the plant to over $1-billion.
The companies said the new investment includes an additional CAM and a precursor facility for local on-site processing of critical minerals.
The development comes a few days after the Canada’s federal government and the Quebec province each provided about C$150-million ($112-million) for the facility.
The companies last year established Ultium CAM joint venture, which is majority owned by POSCO Future M, and had initially invested about $327-million, according to media reports.
Their battery facility in Becancour, Quebec, will produce cathode active material (CAM) for electric vehicle (EV) batteries.
Canadian pension fund CDPQ puts brakes on China investment, Financial Times reports – Reuters
June 1 (Reuters) – Canada’s second-largest pension fund Caisse de dépôt et placement du Québec (CDPQ) has stopped making private deals in China and will close its Shanghai office this year, the Financial Times reported on Thursday, citing people familiar with the matter.
The news follows a May 8 parliamentary hearing in which several Canadian pensions, including CDPQ, were asked about their relationship with China as bilateral political tensions have intensified.
CDPQ is leading its regional investment efforts from Singapore, the report said, noting that it still has business interests in China.
“We paused private investments for some time already — and have focused on liquid markets, which is the majority of our two per cent total portfolio exposure to China. We expect this trend to continue,” the newspaper quoted CDPQ as saying in a statement.
CDPQ confirmed the Shanghai office closure later this year, but declined to comment further.
The Financial Times in February reported that Singapore’s sovereign wealth fund GIC has reduced private investments in China.
During the May hearing, Michel Leduc, a senior manager at the Canada Pension Plan Investment Board (CPPIB), said China was an “important source” for its portfolio.
“We recognize that any investment in China needs to be handled with care, sophistication, and an acute understanding of the current political and geopolitical environment,” Leduc said.
A CPPIB spokesperson declined to comment further on Thursday.
In May, Canada’s C$211.1 billion ($157.87 billion) British Columbia Investment Management Corporation (BCI) said it had reduced exposure in China and Hong Kong by about 15% over two years and paused direct investments in China.
“Our current exposure in China is less than 5% of the overall BCI portfolio, the majority of which is through public markets and via indexed funds,” the asset manager said.
In April Canada’s third largest pension fund, Ontario Teachers’ Pension Plan (OTPP), also closed its China public equity investment team based in Hong Kong.
At the start of the year, OTPP said it was pausing future direct investments in private assets in China, citing geopolitical risk as a factor.
OTPP expects to name a new head of Asia-Pacific Private Capital Direct in the coming months to replace Raju Ruparelia who has left to pursue other opportunities, a spokesperson said by email.
($1 = 1.3372 Canadian dollars)
Our Standards: The Thomson Reuters Trust Principles.
Why Canada would benefit from 'direct index' investing – The Globe and Mail
Traditionally reserved for institutions and ultra-high net worth individuals, direct indexing is a hot topic for investors as technology advances and downward pressure on retail trading commissions have done much to democratize its access. In the United States, direct indexing strategies are expected to outpace the growth of both ETFs and mutual funds. In response, U.S.-based providers are scrambling to build, buy or partner to acquire the required capabilities to get in on the action, driving down the costs and required account minimums for investors. For Canadians, it’s worth getting a better understanding on what Direct Indexing is, and what we can expect for the future of these strategies north of the border.
As a brief overview, direct indexing amounts to personalization at scale. Similar to a traditional investment fund, direct indexing gives individual investors a way to get exposure to a broad segment of the investment market, such as an equity index. Unlike traditional funds, however, direct indexing involves individuals investing directly in the underlying securities (stocks or bonds that make up a larger index), instead of simply buying units of a fund. Investing in this way offers multiple benefits. First, there are a variety of tax strategies (most notably tax loss harvesting) made available by directly holding the individual securities, which can add a potential 1-3% after-tax return on an annual basis. Second, the investor would have near-full autonomy to incorporate their personal preferences for the purpose of excluding securities that do not align with their values or investment objectives. Consider an index that is made up of the 500 largest companies listed in the United States, when investing in this product the investor does not have the choice of what companies make up this portfolio, meaning they may be required to invest in companies that do not align with their values or investment objectives. However, by holding the underlying securities, these non-aligned stocks can be excluded from the investor’s portfolio. While traditional thematic ETFs and mutual funds provide generic options for investor choice, the opportunities for hyper-personalization inherent in direct indexing strategies are almost endless.
As a concept, direct indexing is not new. Sophisticated investors, such as institutions and wealthy investors, have long held the requisite buying power and influence to overlay all manners of unique constraints on their investment portfolios. However, technology advances that could handle significant scale coupled with reduced trading costs brought this concept into the hands of individual investors – the former made it possible for investment managers to offer direct indexing while the latter made it affordable for the retail market.
The seismic nature of this shift cannot be undersold. Consider an investment advisor seeking to satisfy the individual needs of their clients across 10,000 individual investment portfolios. They’d need to manually ingest a mountain of client-level information, go about buying into hundreds of thousands of individual securities and monitor all accounts to identify portfolios that require rebalancing when they drift out of alignment. Prior to the advances described above, this would be cost- and time-prohibitive. Direct indexing offers this high degree of personalization in an automated fashion that is feasible for the investment manager, while better serving individual client needs.
When compared to the U.S., Canada has been slower to internalize the required pre-conditions to support direct indexing, but the outlook is increasingly positive. Leading direct indexing technology-solution providers in the U.S. are expressing interest in Canada as an expansion target. Additionally, Canadian broker-dealers are exploring ways to enable zero commission trading at scale. Fractional shares, at one time considered more of a marketing gimmick, is also slowly finding its footing as firms are tapping into lower account balance investors that are seeking alternatives to traditional funds.
Beyond these structural considerations, it’s worth examining whether demand among Canadian investors will be sufficient to justify bringing direct indexing to the Canadian market. For instance, the main driver for adoption of direct indexing in the U.S. is the opportunity to capture additional after-tax returns through direct indexing’s optimization capabilities. However, given tax code differences in Canada related to the treatment of capital gains, the benefit provided from tax optimization strategies deployed on Canadian portfolios will likely be less than those experienced by our counterparts south of the border. That said, believers in the concept remain steadfast that the increase in personalization for Canadian investors will be enough to drive demand for direct indexing.
Direct indexing likely still has a place in the Canadian investment landscape, despite the differences between Canada and the U.S.. The first ‘Canadianized’ direct indexing solution made available to the mass-market will have to navigate Canada’s structural nuances; if done successfully, investors aim to significantly benefit by accessing institutional investment capabilities at a cost likely competitive with most Canadian mutual funds.
Michael Thomson is director, and Jeffrey Joynt a consultant, with Alpha Financial Markets Consulting
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