Year: 2011

When FIFA President Sepp Blatter announced in December last year that the 2022 football World Cup would be played in Qatar (to the astonishment of almost all observers), it was a victory for more than just the soccer fans of the tiny Arabian Gulf state. It also meant that for the next 12 years Qatar will receive a crescendo of publicity, putting its name in front of hundreds of millions, if not billions of people – and thus giving a massive, if indirect, advertising boost to all its institutions, financial and commercial, at a time when the country is fighting for attention against much better-known Gulf investment destinations such as Dubai, Abu Dhabi and Kuwait.

Before its successful World Cup bid, Qatar, which occupies a mostly-desert, 80 mile wide and 150 mile long peninsular sticking out into the Gulf from Saudi Arabia, was best-known for being the world’s largest exporter of liquified natural gas (LNG), and the owner of the third-largest natural gas reserves on the planet, after Russia and Iran. Even those westerners who have heard of the Al Jazeera television network, the Arab world’s most popular, probably fail to realise it is based in Qatar.

Until the 1930s, Qatar’s sources of income were restricted to activities such as pearl-fishing – a trade wrecked by the development in Japan of artificial pearls. However, the discovery and exploitation of oil and gas has propelled what was a previously impoverished Muslim emirate to the country with the second-highest GDP per head in the world.

Qatar’s economy grew 11 percent in 2009, and was predicted by the IMF to grow at 16 percent in real terms in 2010 and at 18.6 percent in 2011. The country’s population has leapt to almost 1.7 million people in 2010, from just 70,000 in the 1960s and only 500,000 in 1997. Qatari citizens make up less than a quarter of that total, as expat workers have flooded in from the rest of the Arab world, the West and, in particular, South Asia.

But Qatar’s oil is expected to run out in 2023, the year after the World Cup arrives, and while it has enough gas reserves to supply global demand for more than a century, like other economies in the Gulf, the country is looking to boost its non-oil and gas income and reduce its reliance on the energy sector. With the huge amounts of cash that the oil and gas industries have brought to the Gulf, there has been an increasing need for a locally based financial services industry to handle all that money. The Qatari government has announced it will be investing more than $130bn in an attempt to create a “modern, sustainable and industrialised economy,” while the entire Gulf Co-operation Council (GCC) area, which includes Kuwait, Qatar, the UAE, Saudi Arabia, Bahrain and Oman, has planned investments of more than $1.2trn.

At the same time, the Gulf’s geographical position, between Europe and Asia, give it an extra attraction, as a base for financiers looking to do business in both directions. In 2005 Qatar inaugurated the Qatar Financial Centre, prompted, perhaps, by the opening the previous year of the Dubai International Finance Centre in the neighbouring United Arab Emirates, which now contributes more than one percent of the GDP of the whole UAE.

Restrictive access
Gulf countries are generally surprisingly restrictive when it comes to letting foreign companies start businesses within their borders, insisting that the business has to be a partnership, at the least, with one of their own citizens. Some sectors are especially ring-fenced – Qatar’s retail banking sector, for example, remained closed to foreign financial institutions. In addition, rules covering foreign workers are often strict, with tight controls on working visas and limits on employees’ ability to move to new jobs once they get into the country.

However, recognising that the financial services industry is a special case, Gulf countries have taken pains to give investment banks, insurance firms and the like as liberal an environment as possible. The Dubai International Finance Centre, for example, is a 110-acre “free zone” in Dubai with its own laws, regulations and courts.

The Qatar Financial Centre likes to boast that, unlike its Dubai rival, it is “not a property development,” and that the laws that set up the QFC allow any buildings in Doha, Qatar’s capital, to be designated as QFC sites.

However, firms licensed by the QFC still enjoy advantages other companies operating in the emirate do not necessarily have. The QFC allows 100 percent ownership by foreign firms, while all profits can be remitted outside Qatar. It also has its own (more liberal) immigration and employment laws, and its own civil and commercial court. The QFC regulatory authority has brought in regulators from Europe and the US and closely modelled its legislation on other leading financial centres, such as the City of London.

Currently the QFC occupies two towers in the West Bay area of central Doha which are home to 120 or so licensed firms, local and international; the QFC Authority; the QFC Regulatory Authority; and the Qatar Finance and Business Academy, sponsored by Barclays Bank, which has five floors to itself providing courses in subjects such as Islamic finance, training and even a simulated dealing room.

The QFC has now attracted big investment banking names from around the world to open branches in Doha, including JP Morgan, Goldman Sachs, Rothschild, Barclays, RBS, Credit Suisse, Deutsche Bank, Industrial and Commercial Bank of China, State Bank of India, Nomura and Bank of Tokyo Mitsubishi. The number of people employed in the financial services sector had risen from just 6,200 in 2006 to an estimated 20,100 at the end of 2010, an increase of 35 percent every year.

Ironically, however, considering that Qatar’s economy and investments came through the global financial crisis of 2009 in a much better state than Dubai (overseas investment in Qatar rose from $3.63bn in 2008 to $20.75bn in 2009, while Dubai’s debt problems have still not been completely resolved), the QFC failed to wrestle much investment banking business from its UAE rival. Instead, last year, it announced a “new strategic phase,” focusing on asset management, captive insurance and reinsurance. To help boost those sectors, firms operating in them were exempted from all corporate income tax, already at a low 10 percent. In asset management in particular, the QFC Authority announced it was developing new regulations that would allow authorised firms to operate foreign funds, and establish a regime for QFC-registered retail funds, allowing foreign funds to be marketed to retail customers. At the same time, however, 100 QFC employees, a third of the total headcount, were made redundant as some of its functions were outsourced.

Despite claims by the QFC Authority of an investment of $2-3bn in the asset management sector to boost the country’s financial services industry, the QFC will not necessarily find it easy to make headway in the Gulf’s asset management world. The leader here, traditionally, has been the island state of Bahrain, just to the east of Qatar, which last year had 2,711 funds managing $8.55bn, according to the Central Bank of Bahrain. All the same, Doha is already attracting considerable interest from China, according to Shashank Srivastava, the QFC Authority’s acting CEO, who visited Beijing in November last year. There he announced that the authority was in talks with a dozen Chinese financial institutions, including state-owned banks, about them opening offices in the Qatari capital.

Mr Srivastava, who is also chief strategic development officer at the QFC Authority, is an evangelist for Qatar’s potential as a financial centre. In an interview last year, he declared: “It is our goal to build a world-class financial services marketplace where all participants, both domestic and international, will benefit from the considerable local market potential. They can use it not only as a springboard into other countries in the GCC, but also as a powerful regional base from which to tap into the broader growth markets of the Middle East, North and sub-Saharan Africa and the Indian subcontinent.”

Qatar, Mr Srivastava said, “is opening itself up to the world across many fields. These include culture, education and sport. We are also striving to become an attractive destination for international investment, one of the world’s leading locations for international business and finance and a pre-eminent financial services marketplace. Our goals may seem at first to be somewhat ambitious, but we have no doubt that we will achieve them.”

The country’s bid to stage the World Cup must have seemed wildly ambitious at first as well, until the victorious Emir of Qatar, Sheikh Hamad bin Khalifa al Thani, shook hands with Sepp Blatter in Zurich in December, as the world watched open-mouthed.

It is not surprising that the world’s bond markets have looked less and less appealing since their role in the financial crisis and their performance subsequent to it. What is more, experts predict that there is not likely to be much pick up in developed markets this year, or at least in the first half of it.

In 2010 bonds lost some of their attraction as a safe option. The European bond market in particular is heading for another turbulent year in 2011, with investors groping for direction in the face of an uncertain US recovery and a stubborn debt crisis in the eurozone. Sovereign bonds issued by eurozone members had a rough ride as a result of the debt and deficit debacle in Greece and huge financial pressures on the Irish banking sector. Both countries were eventually bailed out by the EU and the IMF. German and French bonds were the exception, with their yields falling to their lowest levels as investors who feared for the fate of the US economy saw such assets as a refuge.

The criticism of the EU’s poor handling and slow response to the Greek crisis rattled the market further, especially as banks held massive amounts of debt bonds issued by Portugal, Ireland, Greece, and Spain – financially weak countries on what became known as the eurozone’s ‘periphery.’ Eurozone officials moved faster in response to the Irish banking crisis, determined to shield Portugal and Spain from having to be rescued with outside money.

But even with the help of the European Central Bank, which since May has been trying to stabilise the market by buying bonds issued by periphery countries, the eurozone’s financial difficulties are likely to persist.

In particular, investors are looking closely at Spain’s long-term borrowing operations as the country could find itself unable to finance its debt on the market. Spain’s economy ranks fourth in the eurozone and a rescue would be far bigger than anything seen to date in Europe. The size of its economy is twice that of Greece, Ireland and Portugal combined.

Several solutions have been put forward, notably the creation of a permanent, well-endowed rescue fund – already approved in principle at an EU summit – and the launch of joint eurozone bonds, which would increase the chance of financially weak countries finding buyers for their debt. There is likely to be debate as well on whether governments should pursue growth or austerity as a means of securing stability and whether the ECB should step up its bond-buying programme.

The EU has already begun the first part of its euro rescue operation. In January it launched a multibillion-euro triple-A rated bond to raise money for the effort to rescue Ireland’s finances, in this year’s first important test of investor sentiment for Europe’s troubled government debt markets. Bankers say that there was strong demand for the bonds from European, Asian and Middle Eastern investors, even before the official opening of order books.

The EU sold about €5bn ($6.7bn) in five-year debt, the first part of some €50bn in bonds that will go towards the Irish bailout over the next two years. Strategists hope the auction will ease tensions in the eurozone bond markets, amid worries that this could be one of the most difficult starts to a year for the European government bond markets.

At the same time, investors fear that the auction could pose problems for some eurozone governments as fund managers opt to buy the EU debt instead of bonds of countries such as Portugal and Spain.

The euro bond, issued by the European Financial Stabilisation Mechanism on behalf of the EU, is underwritten by Barclays Capital, BNP Paribas, Deutsche Bank and HSBC. A further €5bn was due to be issued by the European Financial Stability Facility (EFSF) on behalf of the 17 eurozone members towards the end of January as World Finance was going to print, which would also go towards the Irish bailout. The European Commission has said that as much as €34.1bn will be raised for Ireland in 2011 and €14.9bn by Europe’s two financial aid funds.

The EU has been issuing bonds since the end of December 2008 when it launched its first bond since 1993 to help fund a loan package for Hungary. It launched another bond in February 2009 to support an assistance programme for Latvia. The EFSF bond is seen as a landmark for Europe’s markets as it will be the first issued by the eurozone as one entity. Some investors say it could be the first step towards a common eurozone bond, which may excite the market, particularly as some EU governments are cancelling their own bond sales. For example, Austria has cancelled a bond auction scheduled for January, opting to issue debt through a syndicated deal instead. Some bankers suggested this highlighted the pressures for eurozone governments as syndications are often used to issue bonds that are difficult to sell.

While the current appetite for bonds in the European market may be subdued, investor interest has moved towards emerging markets, particularly Latin America. Barclays Capital has launched a new emerging market local currency bond index. The Markets Tradable Local Currency Bond Index is composed of debt from about 16 emerging market nations and is a rules-based tradable subset of the flagship Barclays’ local currency government benchmark index.

The portfolio is rebalanced semi-annually and includes representative and liquid benchmark-eligible bonds from four different regions – Latin America, Eastern Europe, Middle East and Africa, and Asia. The index is the latest addition to BarCap’s emerging markets index platform, which includes benchmark bond indices, tradable bond indices, FX indices, equity indices, and interest rate swaps indices.

Also, at the start of the year Acadian Asset Management, which has $48bn in assets under management, announced the launch of its emerging markets debt fund, tapping a developing world its manager believes presents long-term investment opportunities. The Acadian Emerging Markets Debt Fund, trading under AEMDX, is starting off with just over $10m under management. John Peta, whose group oversees $30m in emerging market debt, said the improving fundamentals and convergence of sovereign credit ratings between the developing and advanced economies will offer further upside in emerging markets debt. In particular, Mr Peta likes Brazil and Peru which are benefiting from strong domestic demand and exports to China. “If you were somebody from Mars and looked down at these countries and forget their names, looking at just the characteristics, often times, emerging countries look a lot better,” Mr Peta says.

His views have been echoed by Bill Gross, the manager of the world’s biggest bond fund, Pacific Investment Management. In 2010 he urged investors to buy emerging market bonds to protect themselves from “mindless” US deficit spending and its inflationary consequences. Rising inflation reduces the real returns offered by fixed income investments.

Over the past 10 years, sovereign credit ratings have narrowed between developed and developing markets, says Mr Peta, with the convergence happening from both ends. The emerging markets that were often associated with high risk of default are now predominately investment grade, while established countries such as Italy, Greece and Ireland have suffered downgrades.

Last year, funds focused on developing-nation debt made handsome returns, with many portfolio managers anticipating more in the coming year. The T. Rowe Price Emerging Markets Bond fund posted 12.95 percent returns in the past year. Its manager, Michael Conelius, believes that six percent plus returns are likely this year, citing improving credit quality among the emerging markets. Others such as the Payden Emerging Market Bond fund and PIMCO Emerging Market Bond A Load, each posted more than 12 percent in returns last year.

“The debt dynamics in emerging markets have always been equal or better on average than developed markets,” Mr Peta says. “People don’t realise that, still thinking emerging market countries are a basket case.”

Yet it isn’t just foreign investors who are getting excited about Latin America’s potential: some of the region’s own companies want to enjoy a piece of the action. Several Brazilian companies have moved or plan to tap overseas debt markets to take advantage of a hunger for assets in the South American country. In January the government-controlled Banco do Brasil SA, Latin America’s largest bank by assets, raised €750m by issuing eurobonds, paying an annual yield of 4.625 percent. Demand for the issue reached €1.4bn, underlining the strong interest in Brazilian assets, which analysts attribute to a recovery in commodity prices and the resilience of the Brazilian economy during the global financial crisis.

Brazil’s economy fell into a recession in 2009 on the heels of the global credit crisis, with GDP shrinking 0.6 percent. But 2010 saw a robust recovery, aided by ample government and private credit and a series of tax cuts aimed at encouraging consumption. GDP is expected to have risen by more than 7.5 percent last year. For this year, the country’s economy is likely to post a 4.5 percent expansion, which is fuelling investor appetite and local companies’ willingness to raise cash.  

Since the start of 2011, Brazil’s largest shopping centre operator, BR Malls Participacoes SA, raised $230m by issuing overseas perpetual bonds. Also, medium-sized bank Banco Cruzeiro do Sul SA priced a five-year bond worth $400m, offering a yield of 8.375 percent. Other local companies have also issued debt.

And Latin America is not the only emerging economy that is toying with exploring foreign debt markets to raise cash. Union Bank of India has started meeting investors in order to raise at least SWF125m ($128.5m) in its first sale of debt, denominated in the European nation’s currency. The Mumbai-based bank is selling 3.25 per cent, 4.5-year bonds. Union Bank officials met investors in Zurich, Geneva, Lausanne and Vaduz during November. The bank’s general manager VK Khanna believes that markets in Switzerland are stable and there’s still appetite for emerging-market bonds.

Union Bank is selling Swiss franc bonds to reduce costs and expand its investor base, pricing the notes to yield 200 basis points more than the swap rate. Barclays is helping sell the debt. The bonds mature on July 8, 2015. Indian companies more than tripled the sale of foreign-currency bonds to $8.7bn in 2010 as the central bank drove up rupee borrowing costs with six interest-rate increases. This compares to record sales of $9.3bn in 2007.

But not all emerging markets are benefiting from investor appetite. Some are seeing cash move out of the country, rather than flow in. For example, foreign investors sold a net R23.4bn worth of South African bonds between October and December last year, after net inflows of R75.3bn in the previous nine months, according to the Reserve Bank. Jeff Gable at Absa Capital said that investments in emerging market bonds had slowed, but the reversal in flows was “South Africa specific.” One reason was “the market’s expectation that the November rate cut would be the last.” The central bank cut the repo rate 5.5 percent that month, from a peak of 12 percent in December 2008. “Investors… holding South African bonds during the period of rate cuts may have taken the opportunity to lock in some of the profits from earlier trades,” Mr Gable said. The value of bonds rises when rates fall.

Fund managers say that both longer-term investors and speculators had been investing in local bonds, and that the recent outflows represented profit taking by hedge funds and other speculative investors. In contrast to these hot flows, they say, investment by pension funds was more stable, with investor horizons of up to five years. In the year as a whole, local bonds attracted nearly R52bn in non-resident funds while only R36bn went into Johannesburg Stock Exchange-listed shares.

JP Morgan has estimated a record $75bn flowed into emerging market bonds with the bulk of the flows coming from longer-term investors. The bank also predicts that net inflows into fixed income instruments in emerging markets will stay between $70bn and $75bn this year.

Yet perhaps the biggest casualty of bond market volatility has been Islamic bonds. The UK, Europe’s largest market for Shariah-compliant financial products and services, has cancelled what would have been the first sale of sovereign Islamic bonds by a Western federal government as issues fell 15 percent in 2010. The UK government has decided not to issue sovereign sukuk because it is judged not to provide value for money, according to a spokesman at the Treasury. It says that the UK will “keep the situation under review.” The Treasury has been mulling the sale of Islamic bonds denominated in pounds since at least April 2007.

Growth in Europe’s Islamic financial hub has been hampered by slowing economic expansion and the government’s attempt to plug a budget deficit, according to Moody’s Investors Service. The German state of Saxony-Anhalt became the first European borrower to sell bonds adhering to Islamic law in August 2004 with €100m of five-year sukuk, while International Innovative Technologies Ltd, a clean energy company in Gateshead, sold a $10m, four-year convertible sukuk in July 2010, becoming the UK’s first corporate Islamic bond.

Despite the UK’s decision to dump the sales, some institutions are inclined to carry on. The Bank of London and the Middle East Plc, a Shariah-compliant bank, is in discussions with two UK-based companies to sell as much as £200m of Islamic bonds in the next six months.

But investment analysts say that the UK Treasury’s decision will discourage other governments from selling sukuk. “If the UK says that sukuk aren’t value for money, it’s likely other governments may reassess their positions, and the number of sovereign issuers new to Islamic finance may drop,” says John A Sandwick, a Geneva-based Islamic wealth and asset management consultant.

“Nothing is more useful than water; but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.”

Renowned father of economics, Adam Smith, identified the diamond-water paradox in 1776 and economics graduates to this day have revered it. Yet the modern day investor may find some cracks in Smith’s proposal.

Water, it seems, will purchase almost anything.

It is the ultimate commodity, currently underweight, and with the investment potential to provide financial and social return beyond that of your conventional resource stock.

Its value proposition is the ever-widening supply and demand imbalance and the lack of a comparable alternative. Unlike diamonds, water is not ‘forever’ and its finite supply is set to send prices soaring. Thirsty global investors should look no further than to the tides of the Asia Pacific for big business.

Water as an emerging asset class
Climate change, population growth and increased food production are all placing undue stress on water supplies and it is diminishing quickly relative to demand. Consider that over the past century, while the global population has tripled, water use has increased six-fold. In fact, the OECD estimates that by as early as 2030, 47 percent of the world’s population will be living in areas of high water stress unless new policies are introduced.

Governments alone can’t fix the problem, and business will need to be part of the solution.

Thus, the concept of Business Water is born: water that does more than just quench your thirst. Savvy global investors are already buying up what has been labelled ‘blue gold,’ and in a most unexpected location.

The land down under
Hydrogen two parts, oxygen one, and Australia the key ingredient. It may sound ironic that the earth’s driest inhabited continent has spawned the world’s most sophisticated water market – yet statistics show the market is positively raining returns.

In 2009, $3bn worth of water rights changed hands in the land down under.

Aside from having access to clean water, Australia’s water market whets investment appetite for a few key reasons.

It is one of the only countries to have a formal water-trading system, offering players in the space the opportunity to engage in what is effectively water brokerage. The ability to monetise the resource is certainly attractive.
Various intermediaries can buy and sell water from one another in the form of water access entitlements, governed and distributed by the government. The trading system, in theory at least, enables water to be allocated to the highest value user. Introduced in 1983, the market effectively unbundles title to land and water. The marketplace is diverse and includes small, unconnected water markets as well as large, linked systems such as the prized Murray-Darling Basin.

And it’s working well. Jopson & Snow note that in 2009, $2bn worth of water trade took place in New South Wales alone, making the state’s water market equal to the total value of the country’s wool exports.

Government buy-backs are integral to the market’s effectiveness. In times of drought, the Federal Government repurchases water from farmers, effectively inflating the price by reducing supply. Most recently in 2009, the government bought back $1bn worth of water as droughts hit. Since the scheme was introduced, the price of water has jumped from around $900 a megalitre to over $1,200. Forget rising house prices; this ‘liquid gold’ is often worth more to a farmer than his own land.

The Australian market is also attractive because foreign investment is virtually uncapped. Not surprisingly, the national water market is predominantly controlled by foreign interests. Around $80m worth of entitlements are owned by the likes of US firm Summit Global Management through an Australian subsidiary; by Singapore’s Olam International; and by Tandou Limited which has considerable foreign ownership.

Investors also trust Australian water management. Years of perfecting the art of water cultivation in a dry, arable climate has resulted in a country recognised for expertise in demand and catchment management, trans-boundary water-resource management and urban water supply.

Philanthropic water
‘Business water’ also represents a new and emerging space at the intersection of money and meaning, falling into the Impact Investment category and offering good-Samaritan investor types with a torrent of ways to create value.
Impact investment, which is investment geared toward generating social and environmental benefit, was recently recognised by JP Morgan and the Rockerfeller Institute as a new asset class tipped to be worth between $400bn and $1trn in the coming decade.

Water may be the final frontier of socially motivated investment. It is a unique commodity; unlike gold or oil, we simply can’t live without it. Like a diamond, it is multifaceted and has many sides to it. It is at once an issue of health, gender, security, education and economics. Access to safe water is still a pressing development issue, with The World Health Organisation (WHO) estimating that 80 percent of all sickness is attributable to unsafe water and sanitation.

Yet when the market discovers a problem, Smith’s ‘invisible hand,’ generally guides it toward a solution. Water as a development issue has produced a number of market based responses which investors can tap into and potentially achieve triple-bottom line returns.

The market is also being utilised to set the standard and direction of good governance policies. Initiatives such as the CEO Water Mandate and the concept of ‘corporate water stewardship’ promote best practice around sustainable management. Locally, Westpac Banking Corporation is leading the pack, as signature to the CEO Water Mandate and with a staff-community partnership focused on funding water and sanitation projects in East Timor.

Impact investment opportunities exist close to Australian shores, with two thirds of those without access to safe water living in the Asia-Pacific.

How to get in on the water game
Creating a splash in the water market is relatively easy and there are a number of investment options.
For the risk-averse investor, trading access entitlements is probably where the water flows strongest. Capital growth return is estimated to be around three or four percent plus dividends. The much anticipated revised Murray-Darling Basin Plan is set for release this year and will present a number of business opportunities. Furthermore, more government buybacks are on the cards with climate specialists predicting less rainfall in the region over the coming years.

Ambitious investors may be interested in large-scale desalination, water recycling and agricultural irrigation projects that are currently being implemented Australia wide. The Australian Government Department of the Environment, Water, Heritage and the Arts (DEWHA) assists in co-ordinating public and private sector opportunities and may provide a good starting point for interested parties.

Water funds and investment into water via superannuation is touted to be the next big thing, although the number of service providers offering exposure is still low.

The market for trading local water stocks is relatively illiquid. Generally, there is very little movement in price, with stocks trading in narrow bands and underperforming the market in the last few years. This is likely the result of an Australian business community slow to recognise its own strengths coupled with a market dominated by foreign interests distorting competition. Australian asset management firms have been quick to note the emerging trend of water but few are willing to take an equity position for fear of wading into a market that is still too shallow. At a macro level, investment in local firms cannot hurt, provided the investor enter with a long-term horizon.

Water Credit is one option for impact investment. This branch of microfinance involves the provision of small loans to those removed from traditional credit market. It is seen as a culturally-sensitive method of financing that allows local communities to develop water systems best aligned to their own needs. According to WaterCredit.org, a provider with the majority of its operations in Asia, such philanthropic investments stimulate commercial lending.

Similarly, investors seeking equity positions in development projects can look to AUSAID, which increased Asian development assistance by $300m from 2008-11. The government body has actively stated its desire to partner with foreign investors.

‘The value of water flows upward, towards money’
By the time you’ve finished this article, the value of the glass of water next to you may well have risen. Your liquid gold is set to become an increasingly important asset and bargaining tool in both economic and political circles, as supply is evermore constrained.

They say money doesn’t grow from trees, but it very well may come from the seas. Further to offering potentially lucrative financial returns, water as a socially responsible investment gives credit to the use of business as a creative response to poverty. And this is rare; few resources can be spoken of in both banking and international development circles. The multi-faceted appeal of water has both crowds bullish on the resource.

It may be ironic that the world’s driest inhabited continent has the most lucrative water market. Yet, perhaps Smith got something right when he asserted that the price of water is highest in the desert. If only he knew how scarily accurate he would be.