Full name: Hani Nicola Konquar·
Position: Senior equity sales trader for the Middle East and North Africa at Mubasher Financial Services
Years trading: 9
Based: Dubai
What is the asset class and geography you are focused on?
My particular focus is on the UAE’s equities markets.
What is the outlook for the month ahead?
Recently announced budget estimates by the GCC for this year suggest a growing emphasis on sectors such as education, health care and infrastructure. Governments are targeting greater diversification so that the non-oil private sector starts to play a more significant role in supporting the economy. Large surpluses and stable debt ratios should help the GCC withstand a temporary decline in oil prices, but effective diversification remains the only solution in the long term. Looking at the UAE markets in particular, we believe that the month ahead will be strong after major developments, which have been announced by some of the largest companies listed on the Dubai and Abu Dhabi markets. In addition, the MSCI upgrade for the UAE market, which is imminent, will underpin the retail appetite. Our short-term target for the Dubai Financial Market General Index is 5,000 and for the Abu Dhabi Securities Market Index it is 5,500.
What are the main risks, either upside or downside, to the outlook?
For investors there is always the risk of exiting the market too early and losing the opportunity for larger returns as they balance risk with reward. We believe there is ample liquidity in our domestic markets and are of the view that the current valuations of UAE equities relative to historical averages are balanced. We continue to see many investors who were on the sidelines recently starting to enter the market ahead of the MSCI’s upgrade for the UAE markets. The key risks in our market that affect the wider region are related to sharp negative movements in the global equity and oil markets, which do not seem likely in the short term.
What is the best investment at the moment?
The UAE markets have performed very well recently over the past few months but we continue to see opportunities. One of our favourites is the UAE banking sector, which we believe has further upside and provides lower volatility than some other market segments. Banks in the UAE should continue to benefit from lower bad loans provisioning and favourable economic conditions over the years ahead, which should keep demand for their shares strong. Eight UAE companies are among our top picks for the region – Air Arabia, Arabtec, Aramex, Abu Dhabi Commercial Bank, Drake & Skull International, Dana Gas, Emaar Properties and First Gulf Bank.
What was the best investment you were ever involved in?
The years after the crisis provided some of the greatest investment opportunities in Mena equities that we have seen in decades. During 2011 and 2012, for example, we provided our clients with strong buy recommendations across a number of select UAE equities that have delivered stellar performances, with multiple returns significantly above and beyond their original purchase price. During this time valuations were unrealistically low and we saw the opportunity. The sectors with the best returns on recent years have been the airline industry, food and beverage, and the UAE’s real estate market.
What was the worst?
This does not really apply, as investors have both short-term and long-term horizons. During recent years the markets have witnessed significant volatility and this can have an effect on returns, but we always advise our clients on appropriate stop-loss exit prices to limit any potential downsides.
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