markets

Dubai, Qatar stocks to outperform other emerging market peers

A survey conducted by Insight Discovery has revealed that financial advisers were beginning to adjust their client asset allocations to take into economic and investment environment

By Siddesh Suresh Mayenkar, Staff Reporter
19:00 October 11, 2015
 Nigel Sillitoe

Dubai: UAE and Qatar indices may outperform their peers in the emerging market space, according to Mohammad Shabbir, head of equity funds & portfolios at Rasmala Investment Bank.

“Emerging markets on an average are down by a fifth, and our markets are not down that much. We are still a better performing market because we are dollar based, and there is no currency risk,” said Shabbir.

“We expect 10-12 per cent in UAE equities and we don’t see sustained trend indicating any downside risk. Markets should perform better in the remaining part of the year,” Shabbir added.

However, there are headwinds in the economy as the tide is changing in terms of budgetary spending due to a 50 per cent drop in oil prices.

A survey conducted by Insight Discovery has revealed that financial advisers were beginning to adjust their client asset allocations to take into the economic and investment environment, and the process is to be completed in late 2015.

“The number of advisers who expect to trim allocations to almost all other asset classes vary between 15-22 per cent,” Nigel Sillitoe, chief executive officer at Insight Discovery, said.

The advisers remain upbeat about global developed markets (with 56 per cent looking to lift allocations) and emerging markets equities (48 per cent), as well as structured products (45 per cent), the survey revealed.

Volatility

Emerging markets will continue to show high levels of volatility as the Fed decides when to increase interest rates. Federal Reserve officials last month kept the rate near zero, where it has been since December 2008, to see if slower Chinese growth undermines their forecast that US inflation will move back to the Fed’s 2 per cent target, minutes of the September meeting released showed.

“From an overall perspective we are underweight emerging markets versus developed markets but see most potential in Asia. We are currently overweight in all the three markets mentioned above,” Christoph Riniker, head of equity strategy research, Julius Baer said over email.

“However, while India is probably the easiest decision, there remain some issues in China to be solved. Vietnam is a frontier market and therefore only suitable for investors with a respective risk awareness. We recommend playing these markets with ETF’s in order to get a diversification,” Riniker added.