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With the world's stock markets plummeting, is there a safe haven for your investments?
"If you have $1000 what are your options? Investing in bonds, stocks and commodities, or putting it under the mattress. The mattress is a risky place, as we all know," says Burkhard Varnholt, CIO of Bank Sarasin, a leading Swiss private bank.
Those investors that have been hit hard by the recent global economic turmoil may be forgiven for raising an eyebrow at Varnholt's classification of the mattress as a "risky place". They may be forgiven for thinking that the mattress is the only safe place for any cash they might have left in the aftermath of the international market meltdown - after all, they're certainly not going to put it into a bank.
With the spiral into worldwide economic recession showing few signs of easing, anxious investors across the Gulf are asking whether there is anything worth left investing in. However, for those investors willing to put aside emotional sentiments and exercise discipline there may yet be opportunities to come out of the adversity.
"The question is not really what is left to invest in, but how much more investment opportunities have suddenly emerged," says Giyas Gokkent, head of research at National Bank of Abu Dhabi. "It's true that people often say, you can't time markets, but most would agree that impassionate, disciplined investors now will likely get a handsome return on their investments in the months ahead."
Today, fear continues to stalk Gulf markets, leading to stocks plummeting and panic-stricken investors faced with the option of selling off shares or watching their portfolios crumble. What began as a credit squeeze in the US last year has escalated to become a fully blown economic crisis, bringing major financial institutions to their knees and leading to world governments having to pump billions of dollars into their economies in an attempt to restore shattered confidence in markets.
A glance at the Gulf bourses' 2008 performance is enough to make already cautious investors run for the hills. In the six month period from April 1 to September 30, Dubai Financial Market has provided a negative return of 24.04 percent, while Abu Dhabi Securities Exchange has offered a negative return of 14.25 percent.
The markets outside the UAE have fared little better, with Saudi Arabia's Tadawul providing a -18.27 percent return, Muscat Securities Market -16.61 percent, Bahrain Stock Exchange -11.72 percent and Doha Securities Market -3.41 percent.
Real estate, once a surefire sector for opportunistic investors hoping to double their money in a couple of years, now looks a risky bet. Shares in UAE-based Emaar Properties, one of the largest real estate firms in the region, last week slipped below the five dirham mark to their lowest level in four years.
Banks too look an uncertain investment as concerns surface over some institutions' capital strength. Shares in Kuwait's Gulf Bank, which has posted two straight quarterly profit declines, have tumbled 36.48 percent in the year to date, with shares in Commercial Bank of Qatar reaching a 52 week low last week.
Outside the Gulf, things are even worse. According to Bloomberg data, of the world's 89 indices, only three have made gains this year - in Ghana, Ecuador, and Tunisia. Icelandic stocks have taken the most severe battering, down 95 percent year-to-date, while the financial powerhouses of New York, London and Tokyo are all struggling. The S&P 100 is down 40 percent year-to-date, the FTSE 100 down 35 percent, and the Nikkei 225 down 45 percent.
The turmoil has led to a serious squeeze on consumption, and oil - the main source of income in the Gulf - has dropped like a stone through the $70-a-barrel level many analysts believed would act as a support price.
It is not alone - a plunge in commodity prices has signalled the end of the so-called super-cycle many materials have enjoyed, with copper and wheat prices falling more than 50 percent from records earlier this year.
Prices of steel and aluminum, commodities both suffering a dip in demand, have also slid from highs in July and August.
So where to look? Some analysts believe investors looking for shelter from the financial storm for their money could find it in the markets of the fast growing BRIC countries - Brazil, Russia, China and India. China, the biggest contributor to world growth, last week unveiled a $586bn plan to sustain its economy, while forecasters believe India's economic growth is proving more resilient to the financial crisis than most others.
