Is there anywhere left to invest?

"The economies of India, China and Brazil will do better than the US and Europe for the next 12 to 18 months," says Sameer Al Ansari, executive chairman and CEO of Dubai International Capital (DIC). "We continue to look for opportunities in these markets and to wait for better value in North America and Europe."

Shiv Prakash, an equity investment analyst with Dubai-based MAC Capital, agrees. "One can look towards the Indian markets which won't go into recession soon as they have good fundamental stocks and a good story there," he says.

Closer to home, with strong quarterly and nine month growth registered, Qatar's market provides a compelling argument for investment, believes M.R. Raghu CFA, FRM, senior vice president of research, at Kuwait Financial Centre.

"The UAE may have still a lot of banking and real estate concerns going forward. Hence, I would very strongly bet on Qatar," he explains.

While real estate and the banking sectors may be best avoided in the current climate, analysts say investment opportunities still exist in stocks in sectors of the economy which can offer solid - if not spectacular - returns.

"For a long term investor what you are looking for is companies with predictable cash flows, understandable business models and very little volatility of earnings," advises Robert McKinnon, the head of research at Al Mal Capital in Dubai.

He singles out Gulf telecoms operators Mobily, Saudi Telecom Company, Etisalat and Zain as good purchases. "Telecoms companies almost across the board throughout the region have very predictable cashflows and they have still got decent valuations."

At National Bank of Abu Dhabi, Gokkent believes telecoms and blue chip firms are an "easy call" for equity investments going forward. "In principle, anyone investing in a diversified GCC equity basket is likely to get a handsome return over the medium to long term," he says.

He says the current volatility in global currencies means now may be the time to diversify portfolios away from the dirham or other dollar-pegged currencies.

"A UAE investor who would have found euro, pound and emerging market currency assets - for instance Turkish Lira - too expensive earlier, now has an opportunity to shift his or her currency portfolio to currencies other than the dirham," he says.

Although growth in commodities is slowing down, analysts are predicting the asset class is on the verge of an up-cycle following a softening of prices of oil, metals and food grains from their peak levels in the first half of this year.

Prakash, of MAC Capital, forecasts a corrective bounce in crude oil towards $85 in a few months time. "I recommend investing in this commodity with a tight stop loss near $45, with OPEC looking willing to further cut production which can be positive for crude," he says.

After a recent slide, Prakash believes the price of gold is undergoing a correction as it nears its support levels, offering another asset class worth buying into.

He recommends a buy "near $650 to $680 levels. One can enter for a buy for long term duration for a possible test of its previous highs of $1030 in the next year".

Meanwhile, Helen Henton, head of commodity research at Standard Chartered Bank in London, believes food products such as grains could be a strong proposition for long term investors. "Agricultural products towards the end of next year will look quite strong as low prices will discourage planting," she says.

As the financial turmoil continues to weaken international markets, the relative security offered by government bonds could offer another safe haven for investors' money. Sukuks, Islamic equivalents of bonds, issued by Government-owned entities in the region, are also available.

"For institutional investors, government bonds have really rallied a lot over the course of the last several months and one wonders how much lower than they go other than at the very front end of the yield curve," says Jack Malvey, chief strategist, at Barclays Capital in New York.

Iyad Duwaji, CEO of Dubai-based Shuaa Capital, agrees: "Bonds over equity in the short term, because in every recovery spreads of credits start to tighten way before equities reach the bottom."

For those investors still prepared to splash the cash in these uncertain times, there may be a myriad of opportunities amid the chaos. And yet, with such economic turbulence buffeting asset classes the world over, it may be some time before those same investors are able to sleep easy.

Sameer Al Ansari

Sameer Al Ansari is Exec Chairman and CEO of Dubai International Capital. Under his leadership, DIC, which is owned by the ruler of Dubai, has emerged as a leading global investment company and controls around $13bn in assets around the world.

"This is without a doubt the most difficult investment environment ever. The world is facing a very serious financial crisis which will pull us into a deep recession. It will take several years rather than several quarters to turn things around.

"This is not the time to be brave. One has to be very conservative and to preserve capital. It is not about ‘return on equity' it is about ‘return of equity'.

"The economies of the region, India, China and Brazil will do better than US and Europe for the next 12-18 months. We continue to look for opportunities in these markets and to wait for better value in North America and Europe."

Kevin Lecocq

Kevin Lecocq is CIO at Barclay's Wealth, which as of December 2007 had $198bn of assets under management. He is responsible for investment management, fundamental and quantitative research and product sourcing, structuring and development.

"Many of our clients are fairly cash rich right now, and we think that for them, the depressed states of the markets will offer excellent buying opportunities over the next year or so. We think the financial crisis has been, to a degree, floored.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM