What is the asset class and geography you are focused on?
We are specialists in the UAE equity markets, with in-depth knowledge of all listed equities. We also have a strong network in the country, which has given us access to deep liquidity in listed and OTC equities traded in the UAE.
What is the outlook for the month ahead?
The UAE markets have sustained a bullish trend since early last year after hitting an all-time low in early 2012. The trend began by re-pricing oversold equities and continued as liquidity began flowing into the country. The influx of liquidity into the UAE markets has especially increased since late last year, as we witnessed more regional players stepping into the UAE markets with fresh cash. This trend still seems to be in its initial stages and may prove to be one of the strongest bullish markets that the UAE has ever experienced. For the medium to long term, this market is still poised for higher prices. Besides, lower yield on other investment alternatives has made equities and direct real estate investments look even more attractive. We experienced a lot of volatility in the month of March, but most importantly we have completed the technical correction induced by many of the large caps going ex-dividend. The dip in the overall indices has now fully completed and the market is looking for higher levels. The current wave in the market should have enough momentum to take us through all of April and May, as the UAE and Qatar effectively join the MSCI Emerging Markets Index in May.
What are the main risks to the outlook?
As long as inflation is controlled and interest rates remain stable, economic risks would stay minimal in the foreseeable future. Nevertheless, the speculative elements and delays of implementing advanced trading techniques remain prime concerns. Many listed stocks have already entered into overvaluation, while others are still in the lower range of fair valuation. We need effective tools to counterbalance the buying leverage in the market and thus act as smoothers – short selling and market making activities. On a different note, we are still exposed to geopolitical risks. These risks are always present in the region and they continue to be our main concern. However, recently we have seen the geopolitics in the region calm down as Iran’s new government yields to a diplomatic approach to the West and the western-imposed sanctions.
What is the best investment at the moment?
The best investments will always be subject to the profile of the investor. Each investor, whether individual or institutional, has different investment objectives, be it required return, risk tolerance or investment constraints such as liquidity and time horizon. In other words, there is no magic bullet answer for this question. Nevertheless, we emphasise the importance of business cycles. Under current circumstances, we believe that real estate, banking and hospitality sectors will be the first to reflect the economic growth until 2020. Consumer goods and other retail segments shall follow based on how the inflation and interest rates look like in the near future.
What was the best investment you were ever involved in.
My best investment was putting time and effort into the ride through the bear market of 2008 until it finally gave way to the bull market we are seeing today. During this time, people in the field were questioning the viability of their careers as profits and capital dwindled and eventually disappeared. But after sticking through these hard times, the efforts we have made over these past few years have finally come to fruition.
What was the worst?
My worst investment was a loss of opportunity in the local real estate market. There were all the signs of a market bottoming in 2009 and 2010. It was hard to overcome the fear and buy some real estate at the time. Now I have to deal with prices that have almost doubled in most cases.
jeverington@thenational.ae
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