02 February 2016
DOHA: As Middle East Fund managers expect to start rebuilding their regional equities holdings in the next few months, Qatar looks like a major beneficiary of any rebuilding of equities positions. A monthly Reuters survey of fund managers shows 43 percent of them expect to increase their Qatari allocations, the highest level since February 2014, and 7 percent to reduce them; last month, the figures were 36 percent and 7 percent.
"We are increasing our allocation in the regional banking sector, especially in Qatar, because they offer attractive valuations and high dividend yields," Muhammed Shabbir, head of equity funds at Dubai-based Rasmala Investment Bank, told Reuters.
In many sectors and markets, however, earnings growth has become a major concern as companies are forced to adapt to governments' austerity measures, such as cuts in electricity, gas feedstock and fuel prices. The survey of 14 leading fund managers, conducted over the past 10 days, does not suggest funds are heavily bullish on the regional stocks; many see a risk of further losses as austerity policies, adopted by governments in response to low oil prices, weigh on economies.
But the survey does suggest that funds have gone so far underweight on equities that they feel there is little room to continue cutting allocations, and that the next major change in allocations will be to increase them.
Forty-three per cent of respondents expect to raise their Middle East equity allocations in the next three months, while 7 percent expect to cut them. That is little different from last month's survey, when 50 percent anticipated increasing equity exposure and 14 percent expected to reduce it, Reuters reported.
"Volatility in the international markets increased pressure on oil prices, which dropped to levels below many of the Gulf countries' conservative average crude price assumptions used for their 2016 state budgets," said Mohammed Ali Yasin, managing director at Abu Dhabi's NBAD Securities.
But he added, "We believe the first quarter of 2016 is an opportunity to build a portfolio based on value stocks with low price-to-equity values and high dividend yields."
Sachin Mohindra, portfolio manager at Abu Dhabi's Invest AD, said that while he expected markets to remain weak and volatile over the next quarter, there would be bright spots in some companies that were resilient to the economic downturn.
The survey also shows managers becoming somewhat less bearish on fixed income, after January's global market volatility appeared likely to make the US Federal Reserve more cautious about tightening monetary policy.
Fourteen percent of fund managers now expect to reduce their allocations to regional fixed income and 7 per cent to increase them, compared to ratios of 36 per cent and zero last month.
DOHA: As Middle East Fund managers expect to start rebuilding their regional equities holdings in the next few months, Qatar looks like a major beneficiary of any rebuilding of equities positions. A monthly Reuters survey of fund managers shows 43 percent of them expect to increase their Qatari allocations, the highest level since February 2014, and 7 percent to reduce them; last month, the figures were 36 percent and 7 percent.
"We are increasing our allocation in the regional banking sector, especially in Qatar, because they offer attractive valuations and high dividend yields," Muhammed Shabbir, head of equity funds at Dubai-based Rasmala Investment Bank, told Reuters.
In many sectors and markets, however, earnings growth has become a major concern as companies are forced to adapt to governments' austerity measures, such as cuts in electricity, gas feedstock and fuel prices. The survey of 14 leading fund managers, conducted over the past 10 days, does not suggest funds are heavily bullish on the regional stocks; many see a risk of further losses as austerity policies, adopted by governments in response to low oil prices, weigh on economies.
But the survey does suggest that funds have gone so far underweight on equities that they feel there is little room to continue cutting allocations, and that the next major change in allocations will be to increase them.
Forty-three per cent of respondents expect to raise their Middle East equity allocations in the next three months, while 7 percent expect to cut them. That is little different from last month's survey, when 50 percent anticipated increasing equity exposure and 14 percent expected to reduce it, Reuters reported.
"Volatility in the international markets increased pressure on oil prices, which dropped to levels below many of the Gulf countries' conservative average crude price assumptions used for their 2016 state budgets," said Mohammed Ali Yasin, managing director at Abu Dhabi's NBAD Securities.
But he added, "We believe the first quarter of 2016 is an opportunity to build a portfolio based on value stocks with low price-to-equity values and high dividend yields."
Sachin Mohindra, portfolio manager at Abu Dhabi's Invest AD, said that while he expected markets to remain weak and volatile over the next quarter, there would be bright spots in some companies that were resilient to the economic downturn.
The survey also shows managers becoming somewhat less bearish on fixed income, after January's global market volatility appeared likely to make the US Federal Reserve more cautious about tightening monetary policy.
Fourteen percent of fund managers now expect to reduce their allocations to regional fixed income and 7 per cent to increase them, compared to ratios of 36 per cent and zero last month.
© The Peninsula 2016
