Funds cut UAE, Qatar exposure

A substantial number of Middle East funds intend to cut their exposure to stocks in the United Arab Emirates and Qatar, shifting money to less richly valued markets such as Saudi Arabia, a monthly Reuters survey showed.

Shares in Dubai, Abu Dhabi and Qatar have surged over the past 12 months in anticipation of those markets’ upgrade to MSCI’s emerging market index, which will take place at the end of this week.

Many funds believe risk/reward ratios for the three markets have now deteriorated: the latest survey of 15 leading investment managers, conducted over the past 10 days, found only 20 percent expect to increase their allocations to UAE equities in the next three months, while 40 percent expect to cut them.

These figures mark a further deterioration from the April survey, when 27 percent of managers expected to raise their UAE equity allocations and 40 percent expected to reduce them.

In Qatar’s stock market, 20 percent of funds expect to increase their allocations while 33 percent foresee cutting them. That is a major shift from April, when 40 percent intended to raise allocations and only 13 percent to decrease them.

“The markets are volatile in UAE and Qatar, and may continue to be so in June until the end of Q2,” said Mohammed Ali Yasin, managing director of NBAD Securities in Abu Dhabi.

The survey was conducted by Trading Middle East, a Reuters forum for market professionals.-Reuters