Where in the world and what asset class are you focused on?
I am a portfolio manager covering the Middle East and North African equities.
What is the outlook for the month ahead?
During Ramadan, the overall markets activity [or volumes] tends to slow down and picks up towards the end of the month. The GCC equity markets are expected to outperform due to solid economic conditions, driven by government spending and attractive valuations. In Saudi Arabia, the banking sector, a major constituent of the index, has been an underperformer year to date. I expect this is due to limited margin deterioration and lower cost of risk. The UAE, the best-performing market year to date [in the region], is expected to continue its strong performance backed by solid macroeconomic outlook that should translate into better than expected earnings. In addition, the reclassification to MSCI emerging markets and the potential Expo 2020 award [for Dubai] should maintain the positive momentum. As for Qatar and Oman, the optimistic outlook is intact, especially in Qatar after the MSCI reclassification. As for Kuwait, it has been one of the best-performing markets. I expect the market to remain in a consolidation mode until the parliamentary elections. The North African and the Levant equity markets are expected to underperform due to a mix of both political and economic instability.
What are the main risks, upside or downside, to the outlook?
Improvement in the political situation in Egypt and the Levant is an upside risk to the outlook.
What is the best investment at the moment?
Equities, as an asset class, should outperform in the coming two years. For the past three years, there has been a bull run in the bond markets and yields have contracted. I believe further improvement in the US economy will encourage the Federal Reserve to reduce [or] stop quantitative easing, which will push investors to move into riskier assets, such as equities.
What was the best investment you were involved in?
For this year, Al Tayyar, Saudi-based travel agent. The return on the investment was 52 per cent.
What was the worst?
Depa, a Dubai-based contractor. The company had unexpected major project cancellations which was one third of their backlog. The return was minus 28 per cent.