Emirates NBD bullish on selective GCC, emerging market equities

Lender's wealth management arm is advising clients to focus on regional banks, UAE real estate companies this year

Emirates NBD is bullish on the selective emerging market and Arabian Gulf equities. Sarah Dea / The National

Emirates NBD, Dubai's biggest bank by assets, is bullish on selective emerging market equities, where a weaker US dollar, lower oil prices and favourable demographics are expected to boost overall consumption that will positively impact the bottom line of listed companies.

“A lot of the conversations [with clients] are about where in the emerging market should I be investing versus should I be investing in the emerging markets,” Tariq Bin Hendi, an executive vice president and acting chief investment officer of Emirates NBD group, said at a media briefing on Monday to launch the bank’s Investment Outlook 2018 report.

“So when you are looking at a portfolio, where maybe three or four years ago you were talking about 20 per cent allocation, today you are talking about 60 per cent allocation in emerging markets, if not more.”

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Emerging markets are expected to yield returns in the low teens this year, complementing a stellar 2017, while returns in developed markets may touch high single digits this year, according to the report. Both the MSCI Emerging Markets Index and S&P 500 Index have had a bull run last year with the US benchmarks hitting multiple records in 2017.

Within the emerging markets, Emirates NBD favours select consumer and technology stocks while in the US, the focus is on companies from financial, defence, industrial and technology sectors. Oil exploration and production companies in the UK are the investment pick for the lender.

In the Arabian Gulf region, which accounts for about a third of the world’s proven oil reserves, the wealth management arm of the lender, is advising clients to look for investments in regional banks, real estate companies in the UAE and petrochemical firms in the Saudi Arabia.

“Within the GCC there are particular areas we like… it’s always the sustainable dividend players like banks, which are in a very good position this year,” Mr Bin Hendi said. The healthcare space within the broader region and logistics sector, specifically, in the UAE should also be in focus this year.