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Peter Cooper
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Peter Cooper is the editor and publisher of the ArabianMoney Investment Newsletter and ArabianMoney.net website. He was formerly a partner in AMEInfo.com, sold in a private equity deal in 1996. His book 'Opportunity Dubai: Making a Fortune in the Middle East' was a best seller, and his latest... More
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  • UAE equities the Trade of the Decade says ArabianMoney newsletter 0 comments
    May 3, 2010 1:51 AM

    The second edition of the ArabianMoney subscription-based investment newsletter has declared UAE equities as its Trade of the Decade, and is also recommending the shorting of US treasuries for long-term investors.

    The full argument for picking UAE stocks as an asset class above all others available around the world is explained in the latest issue – and subscriptions are currently just $99 for the initial launch period with the first issue free of charge, visit arabianmoney.net to sign up today.

    UAE bourse cheap

    In a nutshell the newsletter says that UAE stocks are incredibly undervalued relative to other global stock markets right now, while the economic outlook for the resource-rich UAE is very strong. Such opportunities do not come along very often for investors.

    But UAE stock markets currently have low trading volumes and 90 per cent of foreign investors have left. Confidence is low. Even ArabianMoney recommends waiting until the quiet summer months before buying, despite an expected upturn in stock prices once the Dubai World debt rescheduling is announced.

    It is no surprise therefore to learn that the recently launched, first-ever exchange traded fund for UAE equities – a cheap way to buy an index of UAE stocks that will mirror the rises and falls of the market – has not been successful.

    The National reports today that only 25,000 shares in the OneShare Dow Jones UAE 25 ETF were traded yesterday, or just $35,000 worth of this new ETF. The highest volume was on April 15th when 150,000 shares changed hands.

    Investors still seem worried by the recent real estate crash in the UAE and what it might mean for hidden bank debts. They also want to see a resolution of the Dubai World debt rescheduling first before they return to the stock market. It does not help that more than half the bourse is comprised of financial stocks.

    Trade of the Decade

    Yet the time to buy shares is when they are cheap and nobody wants to buy them, provided that you can see a recovery on the horizon.

    Will there never again be an oil boom in the UAE? Oil is presently $87 a barrel and that is already very healthy for the UAE economy. Will the Chinese economy push it higher with its overheating?

    That said a double dip in the global economic recovery looks more likely by the day as governments that have been spending to boost growth are now having to cut back to more sustainable spending levels. Ultra low interest rates are also only a short term measure and are by definition emergency measures that are unsustainable.

    Buy UAE stocks when the outlook for the global economy seems most bleak and this will turn out to be the Trade of the Decade for investors. Watch this space for the buying signal. 

    Disclosure: No positions
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