Adel Merheb is a Lebanese national. He began trading US markets out of Kuwait until he joined Mashreq Bank in Dubai working in investment banking. He then focused on trading equities, working with institutional investors, and trading on his own account. His initial focus was commodities, trading gold ETFs, but began concentrating on the GCC markets seven years ago. He tracks US markets but only trades the regional bourses. He is the founder of Tradeyourmarket.com.
What is the asset class and geography you are focused on?
The focus I have is on the equity market, specifically the ADX, DFM, the QSI and the Tadawul. Saudi Arabia is one of the largest markets with more depth and liquidity. Saudi Arabia, the UAE and Qatar has been my focus over the past five years.
And what is the outlook for the month ahead?
We have been on a very strong bull run but we are still far from the market highs. The drop was so intense here in 2008-2009, there has been a very strong rebound. There will a correction at some point but I think that correction will be due to global factors rather that local or regional problems, but I remain bullish for the local markets, I cannot foresee anything locally that would trigger a sell-off.
What are the main risks, either upside or downside, to the outlook?
The strength of the rally has been led by institutional investors, foreign money such as mutual funds raised out of Europe and these take big directional bets. They liquidate very quickly if they think the global picture is changing and that’s when I think we will see the correction.
I think January may see something of a sell-off. There are a lot of potential issues that could trigger a correction in the US markets and could affect the local markets by 10-20 per cent and I would see that as a major buying opportunity. I think we are in a major bull market for the next few years and every pull back or correction will be a buying opportunity. You get a rotational process in the markets.
If you track the rally since the beginning of the year, it starts with the heavyweights, so Emaar and Dubai Islamic Bank, that tend to be driven by heavy institutional interest.
The smaller capitalised stocks like Dubai Investments or Union Properties are driven by local or regional speculation. If you take Q3 as an example of the market, you can compare the performance of Emaar, which rose 12 and a half per cent, against Union Properties, which was close to 100 per cent during that period. So what you see is the rotation, for the first six months of the year UP was doing nothing while Emaar was rising and then you see the rotation to the smaller caps.
What is your best investment at the moment?
We are bullish on equities in general, specifically in the UAE and Saudi Arabia. Real estate also, despite all the gains, we see it as a solid market. If we see a sell-off in the equity markets, then that is a buying opportunity.
What is the best investment you have been involved in?
The gold run. I was working for a hedge fund from 2003 to 2006 and my focus was commodities. I managed to trade a small account and bought gold at US$450 and sold it at $1200. It was a fantastic unleveraged investment. Leveraging eats into a lot of investments.
What is the worst investment you have been involved in?
Some of the exposure to the UAE stocks when the crisis hit, I took a 20 per cent loss but I was leveraged slightly so the 20 per cent turned out to be 30 per cent, which actually was not too bad considering the market was down 90 per cent. It was still one of my worst investments.
ascott@thenational.ae
