First glimmers of hope for UAE equities in three years says Daman
Posted on 13 September 2011 with no comments from readers
Top-rated UAE fund manager Daman Securities CEO Shehab Gargash said today that he saw ‘the first glimmers of hope in three years for UAE equities’ although he also warned not to expect immediate gains.
‘The situation now is like after the 9/11 tragedy when Arab money returned to the region,’ he explained. ‘Arab Spring liquidity is coming into the UAE as a safe haven with bank deposits up 11.5 per cent, year-on-year.
Arab Spring liquidity
‘So far this money has been parked as cash deposits in the UAE and some of it has been invested in real estate, contributing to a stabilization of the UAE property market in the first half. But it can be only a matter of time before this money finds its way into the local equity market, either directly or indirectly from the banks.
‘The returns on fixed interest bonds have also fallen to a level that makes equities look attractive by comparison, and this will gradually have an impact. The early and brave investors will be well compensated in due course.’
A presentation to journalists also highlighted the return of UAE retail spending to near 2008 levels at an estimated $12.5 billion this year, and hotel occupancy rates of 80 per cent again back to 2008 levels despite the addition of many new rooms since then.
Real estate mortgages as a percentage of total bank loans in the UAE were up from 14 per cent to 17 per cent between 2008-10 showing an improvement in buyer confidence even after the Dubai debt crisis.
In later remarks Mr Gargash noted that the Swiss decision to peg the franc to the euro, increased global taxation and regulation, the development of the UAE as an offshore financial centre, currency instability and the new money from China and India would all help the flow of money into the UAE.
Top manager
Mr. Gargash is highly regarded as one of the top Dubai based investment managers. His flagship Daman Second Emirates Fund was the best performing GCC equities fund in the year-to-date up almost six per cent against a benchmark index of one per cent growth.
The next edition of the ArabianMoney newsletter will present a more detailed look at his forecasts for the year ahead and advice on portfolio management in the current climate (subscribe here).
