Trade, Tech & Geo Economics Global Risks on the Rise

Hi guys and welcome to this panel discussion. James, I wanted to start with you and talk about AI. Abu Dhabi is investing large amounts of money into AI. Could you talk about the scale of investment going into AI globally and also in terms of Abu Dhabi specifically?

Yeah, sure. Uh hopefully the mic comes through. Okay. Maybe just on behalf of my panelist, first thing I would say is a huge thank you uh to your excellencies and distinguished guests for having us here. How big is it?

Um the the term that comes to mind if you watch movies and you know the the 1980s movie Jaws, there's a scene where they say after they see the the shark for the first time, they say we're going to need a bigger boat. That's kind of how big it is. When you go through and you do the math of it, uh this is bigger than shale. This is bigger than this is bigger than frankly anything that we've seen within not just our careers but generation. It's essentially the industrial revolution for us.

Some of the math that we've done within the firm would tell us that we need roughly 120 gigawatts of data center capacity by 2030. To get that um you basically have to replicate New York City at peak power 10 times. Uh and to do that you need roughly $5 trillion. So it's really become uh the capital raising the capital markets experience of our entire career. Um, and just so that you don't think that we're doing banker math, that's actually a conservative number.

Uh, our research would tell us that if you do from a GPU buildup, the five trillion is actually closer to 7 trillion. So, it's a pretty substantial number. And then look, just in terms of Abu Dhabi and what's taking place here, there there are really only a few places outside of the US hubs that you would think about um really pushing into. This is one of those. It's the normal criteria.

We've spoken about it a lot today. Obviously, abundance of energy, you have it. Abund abundance of capital, you have it. Uh data zones that are set up for connectivity, for cooling. Maybe the fourth one that I'll mention, and I think the one that's probably the most unique and special about Abu Dhabi is just the regulatory wherewithal, the intestinal fortitude to push in and get things done at speed, at scale.

So, it's a pretty unique time in terms of the size than what Abu Dhabi is able to do.

Interesting. and Hanie, I I want to bring you in here. We're in Abu Dhabi. Abu Dhabi are invest is investing huge amounts of money into AI. How important will those investments be for the long-term trajectory for Abu Dhabi?

Yeah, and and look, we we heard their excellencies speak about this a little earlier today. um Stargate, the 5 gawatt capacity um data center, exporting data capacity to a um few thousand mile radius that includes 50% of the world's GDP. If you think about all of the neighboring countries that are around us and their ability to develop their own capacity, you start very quickly getting to the concept of data being the new oil. um you're exporting AI power through potentially AI embassies or data embassies to many countries around the region. Um and that becomes a cash flow generator for the country here.

Um look, I think the wherewithal and capacity to James' point is there. um uh the the intent statements are very clear and I think the other thing that's um unique to this region and certainly we see it in spades here in Abu Dhabi is that the um the the powers that be can come together align around a single strategy and make that intent well funded well capitalized and pursue it with real motivation and conviction. Uh we're seeing that happen here and and Stargate's a good example of it.

Yeah, it's interesting because when I when I think about Stargate, I think AI chips and Selma, I want to bring you in here. The UAE recently got access to these super prized Nvidia AI chips. How important is that going to be for Abu Dhabi to get ahead in the AI race?

Thank you, uh, Alex. I think uh Abu Dhabi's access to Nvidia chips like you know through the G42 is extremely important uh because it removes a keen bottleneck for training and running large uh AI uh you know models at scale uh and as you know the UAE is also heavily investing in big data centers, high performance computing including AI uh campuses. So having uh and securing a pipeline of uh chips you know for this uh I think also moves this from being a plan into real uh capacity. Uh and this is also not only about technology but it's also about economic development. In my uh view the UAE is also considering AI is the main foundation of new sectors such as digital services, healthcare, you know advanced manufacturing, fintech uh and all of these I think is extremely important for the uh you know UAE's diversification from energy dependence.

Uh on the other hand uh I think the partnership uh of Microsoft uh with the sovereign wealth funds uh is also uh a strong indication uh of the technology players strong commitment like you know to uh uh you know sovereign partnerships who have a strong AI uh strategies uh and for us as HSBC I think it's very valuable to support these kind of like you initiatives and we believe this is where we bring value by linking these kind of technology partnerships with AI strategy.

We have three bankers on this panel and we're talking a lot about AI and the investment into AI. James, I want to turn to you and I want to look at how is this investment into AI and AI infrastructure changing the types of work that you do in terms of debt, equity or other types of financing?

Yeah, it's a good question. So, to answer a capital need of the scale that we're talking about, uh, at least within our firm, we're we're talking about accessing capital in a totally different way than we used to. So you used to have silos or veins that you would work through CNBS, ABS, investment grade, high yield, construction, even private capital. And to do something that has TE's associated with it, 5 trillion, 7 trillion, we think that you need to reimagine the way that you're approaching capital raising. Uh within the firm, we recently put out an announcement where we created a group uh called strategic financing solutions.

And the concept of it is to cut across all of these capital uh buckets. Uh we actually think that you can solve the capital need if you're accessing all of them and you're accessing them at the right time. I would say just for this group an underlying assumption within that is the businesses the actual data centers perform the way that they need to perform. Anytime you say that many sources of capital and a business performance that needs to sit underneath it, you know that they don't work perfectly. you know that there's going to be a hiccups and so you have to be ready to manage yourself through that.

But if you coordinate it the right way, it's different than yesterday's capital raising. It's new. It's all veins. All of them have to show up. If they all do, it'll be it'll be um able to be done.

Last comment that I'll make. Um also associated with it though are some of the best capitalized companies in the world. Microsoft, Oracle, Google, Meta. But even if you look within those companies, the way that they're approaching raising capital is wildly different even across those four.

Interesting. And Salem, I want to bring you in here. Are you seeing a demand for new types of financial structures as we see this investment into AI?

Uh, absolutely. Uh, it's totally different than like know 10 years ago. 10 years ago when you look at the financing it was mainly about the extraction and distribution. Uh but right now uh I think like you know today the banks are mainly financing data centers which form a larger part uh you know of the new uh infrastructure uh and as you would appreciate these infrastructure uh you know uh projects are massive. when you're talking about like you know a large gigawatt campus for AI this is costing around 8 to13 billion dollars uh and it's very almost impossible like you know for any single institution uh to finance all of this project on their own uh and therefore uh like you know we can structure uh these kind of like you know syndicated uh facilities uh and we are also I think like you know seeing a move towards more project finance type of you know structure for these kind of uh project financings.

Uh in the past a tech company will only borrow a corporate loan. uh but now since first of all the sizes are extremely long and then you have uh some involvement from technology giants like Microsoft or Google uh you can structure these like you know in the uh form of 10 to 15 years of like know project uh financings similar to what we used to do uh on the power uh plant side uh and uh you know we have as HSBC we have done uh these kind of financings especially in uh Asia. Uh a recent example is a data center financing that we've done in Malaysia and currently we are working on bringing these type of new financing structures uh into the uh Middle East as well. uh and I think another theme that we are seeing is that across the region there's also a growing demand uh for structures that support crossber technology uh partnerships uh where Gulf investors back AI and data center projects in the US and Asia uh to also secure uh reciprocal investments into the GCC as well and this is an area where we as HSBC are trying to play a important role.

Interesting. And I want to turn now to digital currencies and stable coins. Abu Dhabi is investing large amounts of money into this infrastructure. Hani, I want to bring you in here. How important a role will stable coins play in the financial ecosystem going forward?

Yeah, I think very important, but for a broader reason, and I'll bring it back down to your question of stable coin. Um we think digital assets and actually the blockchain distributed ledger technology that supports it um is going to be um uh over time and and there's a question mark on how much time is going to overtake traditional finance and we see our role at VNY um as partly around enabling the traditional to digital transformation and the interoperability between the two. Now to create interoperability between the two, you need cash and cashlike instruments. You need to create tokenized instruments and you need to create digital native assets. And we're in all of those businesses.

Stable coins today 190 to$220 billion dollars worth of stable coins created so far. BNY is sitting as a reserve manager and custodian on a good 50% of those already. We think that industry can grow to two to three trillion by 2030. We will be an enabler of it. But really it's to enable both more um efficient and frictionless pay payments across borders and to enable the delivery versus payment.

So the payment component of delivering a digital asset where is whether that's a digital mirror of a traditional asset or a digital native asset either way it's going to be very important.

Okay. And and James I'm interested to get the view of JP Morgan and how they see digital currencies evolving. I saw JPMcoin recently got announced.

Sure.

Can you talk about how the bank sees this market going forward? Yeah, I I for a minute there I thought I was going to dodge this one because for those of you that know the gentleman that I work for, he's he's a little famous for some of his uh comments within the zip code. Um so you've got to start with the question of what what's the problem that we're trying to solve, right? It's a client solutioning business. Um for many many clients, the the rails that are set up today, they work just fine.

Uh at JP Morgan, we move 12 trillion dollars a day around the world. We actually broke a record and we moved 15 trillion uh not too long ago over the summer. Uh things get settled 97% of the time within one day, 60% of the time within two hours. And so it works for a lot of people, but not for all. And some people need instantaneous settlement.

And that's where the concept of blockchain comes in. So what we said is what's the solution for a client that we're trying to solve. Most of the time the pinch point, the bottleneck that our clients are experiencing is going from traditional currencies into a public blockchain and then coming back out. That's where they're experiencing the pinch points. That was the reason for JPMCoin.

Um so we set it up u for our clients. It's a deposit token that works, we think, in a good way to help them go from traditional banking, enter into public chain, and then exit back out and do it in a stable JP Morgan like way with the right KYC's that all of our our institutions follow.

Selene, we've only got a few minutes left, so I want to end on you. Talking about stable coins and digital currencies, often when you when we see Abu Dhabi, they're investing billions of dollars cross border. Can you see a lot of those transactions happening on the blockchain rather than traditional systems?

Uh I think the short answer is yes. Uh but it has to be regulated. Uh it has to be safe. Uh and it has to be sovereign. Uh so here you know we are not talking about speculative cryptocurrencies uh we but we are more talking about uh digitizing uh real money.

uh and in this respect the UAE both UAE and the Saudi are both core participants in the project uh Ambridge uh and this is a multi- central bank digital currency platform uh that uses distributed ledger technology to move funds instantly uh like you know between central banks uh and different uh commercial uh banks in different jurisdictions. uh and recently we have uh seen a test of $22 million of uh you know payments uh being uh executed uh on this uh platform. Uh so I think the most important thing is that this shows uh that it is technically possible uh to move money between countries almost instantly uh and at lower cost but importantly while keeping the central banks uh still uh in control uh you know of the uh core banking system. Uh as HSBC we have been involved uh in Ambridge as a commercial bank participant. Uh and we are also right now working on uh tokenized deposit solutions for institutional clients uh including plans to expand the services in the UAE in the next couple of months.

But this is going to be an increasingly important theme uh across the industry uh in the near future.

We have a couple of minutes left and we have some really interesting people here. So I want to open the floor to you guys and get your views. We've spoken a lot about AI infrastructure spend and investment into AI and also digital currencies. Are you optimistic or pessimistic going into 2026 about the direction of this flow? So direction of the world generally

investments into AI and the direction of digital

I mean look I I think uh first of all um there's been a significant amount in of investment into AI this year in 2025 a lot of that investment has gone towards the US uh call it 650 billion US dollars equivalent investment going into US equities from from non US investors this year. A lot of it maybe concentrated in the big tech sector around data and AI. I think that we're going to continue to see a macro trend that says the same thing, but at the micro, it's going to be all about figuring out what are where are the um cash flow generative um thoughtful um contractbased energy um uh supported investments and where are going to be the investments that uh maybe to avoid. Uh so at a micro level there's going to be some blowups because too much money chasing um you know too few opportunities if you will. Um there might be a lot of projects out there that u that one should look to avoid.

Maybe just to jump in. So look look at the market. It's priced for perfection right in terms of execution funding. Go down the list I mentioned you you'll see hiccups. Um, so you're starting from a place where you say, "Okay, perfection."

We know that the long-term trend th this is our industrial revolution. We know that the countries that went into the industrial revolution first had a hundred-year advantage. So, we know that the long-term investor will be advantaged if they participate in this. But to think that there won't be hiccups along the way. And we've experienced it already.

Think of what happened within liberation day. Think about what happened when the dee seek information came out. You can see these shocks hit the system, but long term progress will continue and the long-term investor will win in the end.

Amazing. That is all we have.

The uncertainty is that everybody's going to continue talking about AI in the future.

Yes. Amazing. Well, thank you so much for your time and uh on to the next panel.

Thank you. Thank you.