National Bank of Abu Dhabi (NBAD) , the largest asset manager in the UAE, said it was shifting funds to Saudi Arabia and Abu Dhabi, where infrastructure spending is likely to boost profits and shares.
The Abu Dhabi government-controlled bank, which manages about $1.5 billion of assets, has cut its exposure to Kuwait, Qatar and Dubai, partly to raise funds to invest in its home city and in the world's largest oil exporter, its asset management chief investment officer told Reuters.
"We are starting to see some positive signs in Saudi Arabia," Nazem al-Kudsi said in an interview on Tuesday. "The market has been a laggard, so we see upside."
Saudi Arabia's main stock index until this week was the only Gulf stock market to be in negative territory for the year to date. But thanks to gains over the past few trading sessions, it is now up 1.8% for 2007 so far.
Dubai, by contrast, has lost all its 2007 gains after five consecutive trading days of declines to be down 1.5% so far this year.
A year ago, about 95% of the assets NBAD managed were in markets in the UAE, of which about 60% were invested in Dubai, Kudsi said.
The bank started shifting its assets in June. Now the UAE's overall share is 85%, with 60% of that invested in Abu Dhabi, Kudsi said. Saudi Arabia accounts for about 5% of the total.
"The UAE is the most open economy in the region, the least dependent on oil and where the reform process is most advanced," Kudsi said.
By contrast, Saudi Arabia restricts even Gulf Arab investment in its stocks and forbids nationals from outside the region from investing in equities other than through funds.
"Bullish on Abu Dhabi"
In Abu Dhabi, NBAD favours government-backed companies such as Aldar Properties and Sorouh Real Estate, which are developing residential and commercial projects in the Middle East's third-largest oil producer.
Shares of Sorouh have almost doubled this year, and Aldar is up more than 62%.
"We are very bullish on Abu Dhabi," Kudsi said, on expectations the emirate's population will grow at a faster pace after it opened its real estate market to foreign ownership in 2005.
It is a view shared by London-based Blakeney Management, which increased its exposure to the Gulf to 40% from 15% at the start of the year, with the biggest investments in Abu Dhabi.
Dubai-based Daman Securities, which manages about $750 million in Gulf markets, has also increased its exposure to Abu Dhabi, and Cairo-based EFG-Hermes plans to invest more in Saudi Arabia.
Boosting NBAD's confidence in Abu Dhabi is the view that the government would aid state-controlled companies that get into financial difficulty, whereas firms in neighbouring Dubai - which borrow more - may not receive similar backing because the Dubai government is not as wealthy, Kudsi said.
"One thing people will be looking at more is the cost of capital," Kudsi said, after rising defaults on US high-risk mortgages spilled into global credit markets last month, driving up borrowing costs and triggering a flight from risky assets.
In Saudi Arabia, NBAD favours blue chip companies such as Saudi Basic Industries (Sabic), which in May agreed to buy the plastics unit of General Electric for $11.6 billion. Sabic is the world's largest chemical company by market value.
NBAD cut its exposure in Kuwait because "valuations are getting a bit high", Kudsi said.
Kuwait's main index is the best performer in the Gulf this year, up more than 24%. Source
The Abu Dhabi government-controlled bank, which manages about $1.5 billion of assets, has cut its exposure to Kuwait, Qatar and Dubai, partly to raise funds to invest in its home city and in the world's largest oil exporter, its asset management chief investment officer told Reuters.
"We are starting to see some positive signs in Saudi Arabia," Nazem al-Kudsi said in an interview on Tuesday. "The market has been a laggard, so we see upside."
Saudi Arabia's main stock index until this week was the only Gulf stock market to be in negative territory for the year to date. But thanks to gains over the past few trading sessions, it is now up 1.8% for 2007 so far.
Dubai, by contrast, has lost all its 2007 gains after five consecutive trading days of declines to be down 1.5% so far this year.
A year ago, about 95% of the assets NBAD managed were in markets in the UAE, of which about 60% were invested in Dubai, Kudsi said.
The bank started shifting its assets in June. Now the UAE's overall share is 85%, with 60% of that invested in Abu Dhabi, Kudsi said. Saudi Arabia accounts for about 5% of the total.
"The UAE is the most open economy in the region, the least dependent on oil and where the reform process is most advanced," Kudsi said.
By contrast, Saudi Arabia restricts even Gulf Arab investment in its stocks and forbids nationals from outside the region from investing in equities other than through funds.
"Bullish on Abu Dhabi"
In Abu Dhabi, NBAD favours government-backed companies such as Aldar Properties and Sorouh Real Estate, which are developing residential and commercial projects in the Middle East's third-largest oil producer.
Shares of Sorouh have almost doubled this year, and Aldar is up more than 62%.
"We are very bullish on Abu Dhabi," Kudsi said, on expectations the emirate's population will grow at a faster pace after it opened its real estate market to foreign ownership in 2005.
It is a view shared by London-based Blakeney Management, which increased its exposure to the Gulf to 40% from 15% at the start of the year, with the biggest investments in Abu Dhabi.
Dubai-based Daman Securities, which manages about $750 million in Gulf markets, has also increased its exposure to Abu Dhabi, and Cairo-based EFG-Hermes plans to invest more in Saudi Arabia.
Boosting NBAD's confidence in Abu Dhabi is the view that the government would aid state-controlled companies that get into financial difficulty, whereas firms in neighbouring Dubai - which borrow more - may not receive similar backing because the Dubai government is not as wealthy, Kudsi said.
"One thing people will be looking at more is the cost of capital," Kudsi said, after rising defaults on US high-risk mortgages spilled into global credit markets last month, driving up borrowing costs and triggering a flight from risky assets.
In Saudi Arabia, NBAD favours blue chip companies such as Saudi Basic Industries (Sabic), which in May agreed to buy the plastics unit of General Electric for $11.6 billion. Sabic is the world's largest chemical company by market value.
NBAD cut its exposure in Kuwait because "valuations are getting a bit high", Kudsi said.
Kuwait's main index is the best performer in the Gulf this year, up more than 24%. Source
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