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Dubai: Fund managers got a rude awakening earlier in the year when regional bourses fell off a cliff in late January, reacting to international markets. The MSCI GCC Index shed nearly 10 per cent by the end of the month.
Since then Zawya's Mutual Fund Monitor losers' list is spilling over with funds firmly in the red.
What will fund managers do this year to navigate the treacherous waters of the regional markets and avoid similar shocks?
Be opportunistic, for a start. Global Investment House's fund managers found the January downturn a good buying opportunity.
"We are happy and confident with the stakes that we have taken and are quite comfortable with our decision," says Shahid Hameed, head of asset management-GCC at Global.
"In fact, we took the opportunity to buy the stocks which fell in sympathy to the rest of the market. We take advantage when we think a stock has fallen merely because of exogenous factors."
Hameed is reluctant to set targets for his funds this early in the year, but he does not expect markets to repeat last year's performance. "I expect subdued but healthy returns. Overall, the sentiment remains positive."
Deon Vernooy, head of asset management at Emirates Investment Services, shares the sentiment, although he does see value in UAE companies, despite their vulnerability to international shocks.
"We are long-term investors. We perceive high oil prices as the key growth driver, and as long as they remain high, we are not too concerned." EIS's Emirates MENA Opportunities Fund was up nearly 5.5 per cent in the month.
As for most fund managers, Global's strategy will be stock-specific this year. "We expect good value in UAE and Qatar markets and, selectively, in Kuwait as well.
"In sectors, financials will continue to be a good bet, real estate stocks, construction, infrastructure and transportation such as Air Arabia and Al Jazeera."
Global's 10 Large Cap Index Fund had already risen 15 per cent this year, by February 7.
Both Global's Hameed and EIS's Vernooy are looking at launching new funds this year, which shows that asset managers are still cautiously bullish on the market.
- The writer is the managing editor of Zawya.com.
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