InvestAD portfolio manager Sachin Mohindra says even after the rally in 2013, the GCC markets offer a number of interesting opportunities.
Trader profile: opportunities if Saudi Arabia opens market
Name: Sachin Mohindra
Job: Portfolio manager, InvestAD
Years in portfolio management: 20
Based: Abu Dhabi
What is the asset class and geography you are focused on?
I manage long-only active equity portfolios and funds in the Mena [Middle East and North Africa] geography with a special focus on the GCC. I am strongly committed to bottom-up stock picking through fundamental research.
What is your outlook for the coming months? What should investors look for?
I am positive on the equity markets in our region, especially from a medium-term perspective. I feel that GCC countries will not only continue to remain an oasis of economic stability in the emerging and frontier market universe, given their twin surpluses, but also deliver encouraging equity market returns as a number of companies deliver encouraging earnings growth over the next two years. Even after the rally in 2013, the GCC markets offer a number of interesting opportunities and I believe that investors focused on careful stock selection within each of the GCC markets should be able to generate attractive returns in 2014. A number of listed companies are direct beneficiaries of the continuing growth in UAE’s non-oil economy, the robust consumption demand across the region and the economic recovery in key developed and emerging markets and are available at attractive growth-adjusted valuations. The UAE’s successful bid to host the Expo 2020, the upcoming MSCI upgrade of UAE and Qatar, and the large scale of projects across the region have resulted in positive investor sentiment and an increase in trading volumes.
What are the main risks, either upside or downside, to the outlook?
Saudi Arabia currently does not allow direct investment in its equity markets by non-GCC foreign investors, but significant upside could come if the Saudi Capital Market Authority opens up its equity markets for direct access. A further acceleration of project implementation across the region and a continuation of the economic recovery seen in key developed and emerging markets would also prove beneficial. Downside risks would include any slowdown in the global economy, a prolonged slump in oil prices and an escalation of the political turmoil in the GCC’s periphery.
What was the best investment you were ever involved in?
While I could highlight a number of decisions from the past, in 2013 I was an early investor in relatively less-followed stocks in the UAE such as Waha Capital, Dubai Investment Company, Dubai Islamic Bank, as well as in a number of Saudi consumer companies such as Al Tayyar and Saudi Catering. Some of these stock picks generated total returns in excess of 100 per cent and were clearly my best investment decisions in recent times.
What was the worst?
While 2013 was generally very positive for our investments, I regret not having a larger exposure to some consumer stocks in Saudi Arabia. In hindsight, we probably should have rotated out of some of our banking sector exposure in that market.