Peter Cooper, a veteran Dubai business journalist, established ArabianMoney.net last year to provide advice and analysis on investment topics around the Middle East. He talks about the long slide for UAE stocks and whether he sees gold continuing to shine:
qIs there an appetite in the UAE for a website offering investment tips?
aNot really actually. The Dubai Financial Market crashed this week to levels last seen in 2004 and trading volumes are all over the place. Generally, there's not a buying appetite among investors. People just don't want to invest. You also can't short the market in the UAE, so I can't even recommend doing that.
You won't be lighting the candles to celebrate the website's one year anniversary then?
Start-up projects like these take time. I hope that by the time investors do return to the market in droves, the website will have gained some credibility.
Does the website currently make any money?
The website is free at the moment, but readers can pay for the monthly newsletter with recommendations on shares and other assets. The costs are low because contributors often give me free work, so at the moment the website is helping towards my cost of living.
As political unrest sweeps the Middle East, where do you advise readers put their hard-earned dirhams?
Mainly in cash deposits. But do be prepared to make a move when the stock market bottoms and liquidity picks up.
When might that be?
Well, we'd all be Warren Buffett if we could predict the bottom. What you should try to do is buy near the bottom of the market, on the way down or up.
For now, you continue to be bearish?
High oil prices will continue to bring down global stock markets. As international markets come down, the oil price will eventually correct, which will push stocks in the UAE even lower. If oil goes above $120 per barrel, then statistically, the probability of another crash in two to three months is very high.
Are there any other reasons to be negative?
The sustainability of the global economic recovery is open to debate. Japan has major debt issues and an ageing population, there are sovereign debt worries in Europe, while the US recovery is quite weak given the high level of stimulus.
Outside cash deposits, are you positive on any asset class?
I continue to recommend buying gold. The high levels of monetary stimulus and inflation in many countries will continue to support the price. But I certainly wouldn't buy a mutual fund. Retail investors in the US have bought into more mutual funds in the two months of 2011 than the whole of 2010. Historically, retail investors always buy into these funds at the top of the market.
* Rory Jones
