March 05, 2011
– Comments (10)
Count me as bullish.
For information on investing in Dubai visit
David in Qatar
Later this week I will start adding information on individual stock picks.
What I'm looking at:
Dubai World (currently own)
I think if you have a long term window, with oil over $100, great plays!
Thanks for the rec list. I have investigated quite a few Qatari companies (I think the Qatar DSM is a great play going forward as well), but nothing on the UAE side.
I'll be doing a lot of research this week. I'll look up those stocks and make for some recs of my own. Then we can dig deeper and see if there are any great ideas lurking.
This political turmoil has presented us with an outstanding opportunity.
Time to dive in.
Since I am no expert in this region, why are you calling for a bottom?
I wouldn't go so far as to call a bottom, but I do think this is a good opportunity. The political instability that has rocked neighboring countries is unlikely affect to either the UAE or Qatar in a significant way in the long run. Their exchanges, however, are being beaten down because of it.
The UAE is a special case. They had a fantastic credit-expansion-induced boom and bust. However, they have certain economic factors working for them that simply cannot be replaced. For starters, Dubai is the banking center of the Middle East. Not even Qatar is interested in challenging Dubai in that sector. Instead, Qatar has gravitated towards being the sports center (and done that quite well I might add). Dubai has almost no taxation ("overall tax revenue as a percentage of GDP was nearly negligible at 1.8 percent" - Heritage Index of Economic Freedom). Despite the bust of 2008-09, the country has kept its commitment to liberal economic policies (good liberal, not commie liberal).
The picture isn't perfect of course. You still have a massive restructing of debt. There is still favoritism and moderate corruption. It's no free market paradise, but the UAE in general continues to embrace economic freedom rather than rejecting it. And it will take a while for investors to realize that political instability in the Gulf States is not a serious threat to the UAE.
So you have a secondary downward correction after the bust of 2008-09. Isn't that fantastic? =D
I've been in the ME off and on since 2002. I spent most of those years kicking myself for not participating in the last UAE bull run. I swore I wouldn't miss another.
But that's doesn't mean I am going to drop $50k on the Dubai Nasdaq tomorrow. "Dive in" means it's time to start the due diligence, picking quality compaines, building positions. We could continue downward for months from here. But Dubai has the fiscal freedom and position in the Arab world to recover nicely.
The biggest concern here is that a new war with Israel breaks out. Even then, don't consider Dubai a target for Israeli wrath. It'd just be another buying opportunity.
(Of course, keep in mind that I could be wrong about everything I said here. But I am going for it.)
I had figured that was your rationale. Do you know of any good funds that track this area? CEF/ETF/mutual fund or anything? I wouldn't mind putting a little bit of money on this, but I don't have the time to start researching the region and the inidividual companies.
Worth a look:
Name Weight %Emirates Telecommunications Corp. 7.99 % First Gulf Bank PJSC 6.83 % Emaar Properties PJSC 6.08 % National Bank of Abu Dhabi PJSC 5.07 % Al Dar Properties Co. 5.00 % Emirates NBD 4.70 % DP World 4.58 % Sorouh Real Estate PJSC 4.42 % Dubai Islamic Bank PJSC 4.31 % Aabar Investments PJSC 4.29 % Dana Gas 4.07 % Abu Dhabi Commercial Bank PJSC 3.61 % Dubai Investments PJSC 3.52 % Air Arabia PJSC 3.50 % Abu Dhabi Islamic Bank 3.49 % Dubai Financial Market PJSC 3.45 % Arabtec Holding PJSC 3.30 % ABU Dhabi National Energy Company 3.18 % ARAMEX PJSC 3.12 % Deyaar Development 2.99 % Waha Capital PJSC 2.63 % RAK Properties PJSC 2.58 % Drake & Scull International PJSC 2.50 % Gulf Navigation Holding PJSC 2.36 % Union Properties PJSC 2.29 %
I need to get on this. Sorry I haven't blogged back with any ME stock picks. Work has been hectic. No time for research.
David in Qatar
The 1UAE ETF you mention above looks to be unavailable on American exchanges. The closest one I've found is Van Eck's MES (Market Vectors® Gulf States Index ETF). Here's the index country breakdown (as of December 31, 2010):
Banks and financial services account for over half of the holdings. You can see more at http://vaneck.com/funds/MES.aspx
Any thoughts on this one, David?
I would definitely consider that a buy. Although you can expect the exchanges of Oman, Bahrain, and Yemen to be hammered over the next few months (possibly pulling the other further down as well), growth projections for Qatar alone should more than make up for that.