Asiya Investments chief’s sanguine focus on China

This must be a scary time to be a committed investor in China. The country’s stock markets have dropped sharply, while there are fears of a real estate bubble and growing problems in the financial sector.

There is also a wider concern that the country’s dynamic economy, which saved the world from recession after the 2009 financial crisis, is running out of steam.

Ahmad Al Hamad, however, appears to be sanguine. “We remain invested in China,” he says.

That is a careful endorsement from a man who has made himself an expert on Middle East-Asia investment policy.

The company that he joined as managing director in 2005, Kuwaiti-owned Asiya Investments, is a committed traveller on the New Silk Road, the figurative trade route seen as the modern-day equivalent of the old commercial artery that linked China with the Middle East and Europe.

“This is Asia’s century,” the firm’s website proclaims, and Mr Al Hamad cautiously endorses that vision. “It is where all the growth in the world is coming, and where all the potential lies. The Middle East has for a long time looked to the West, but a lot has changed in the past 10 years. Now China and India are the growing markets,” he says.

Indeed they are both growing, faster than any western market. India especially has lately grabbed the headlines, and investor interest, for a growth spurt under a more business-friendly government.

But China and its neighbours including Hong Kong and Taiwan, which Mr Al Hamad calls “Greater China”, remain Asiya’s main focus. That is despite some concerns, not least about official intervention by the Chinese authorities that effectively halted trading in many stocks in what amounted to a curtailment of “free market” principles.

“Yes, market conditions have been turbulent to say the least. But what was more surprising is the response by the regulators and government,” he says. “Some would say quite severe. Many countries have propped up their markets through intervention so the move is not surprising, but the freezing of trading of company shares was, I think, misjudged, as it only hastens large swings in the markets.

“But one cannot forget that even with the recent downturn, markets are still 30 to 40 per cent up over the past year. I do believe that the government will continue to support the markets and has sufficient resources to apply in that effort.”

In any case, he believes Asiya’s strategy has limited the downside risks. “Our access is mainly via the Hong Kong H-share market, which is not subject to the retail flows seen on the onshore A-share market and is mainly in stocks with large market capitalisations,” he says.

“We monitor immediate risks (of which I do not regard stock market performance as one) such as inflation and unemployment (not GDP growth), which we believe to be the key factors for China’s stability.”

Mr Al Hamad has been with Asiya since 2005, after a career in investment banking that followed a Princeton education and a stint as an analyst at the US bank Morgan Stanley. Asiya is a public listed asset manager, with 15 per cent of its shares owned by the Kuwait Investment Authority, the balance held by “some big shareholders” and the public, he says.

Its headquarters is in Kuwait, but increasingly more business is done from its office in the Dubai International Financial Centre. “Dubai has been our marketing hub, and it’s also proved itself to be the regional financial centre,” he says. There is also an office in Hong Kong where he spends a lot of time reviewing the Asian investment scene.

“The big theme is the rise of the middle classes in South East Asia. The sectors we like are those that reflect this, like real estate, ‘soft’ infrastructure like education and healthcare, IT and financial services. We are not linked to commodity investment.”

Most of Asiya’s $1.2 billion assets under management are in public quoted stocks, with the rest in private equity. It also runs a growing trade finance business and a prolific research department.

A quick tour d’horizon of South East Asian markets throws up the following highlights: “We like Indonesia and the Philippines but are neutral on Malaysia. In Singapore we see the attractions of the financial sector,” says Mr Al Hamad.

“Vietnam and Myanmar are frontier markets, and we’ve tended not to look too much at those in the past. But we’re becoming more interested because companies in those countries are shaping up to be the manufacturing centres for China. Vietnam has 90 million people and there is opportunity for infrastructure investment, but also currency problems.”

Asiya’s orientation is eastwards but it operates in the Arabian Gulf investment environment, and Mr Al Hamad necessarily has a view on economic factors that determine investors’ outlook at home. Chief among these at the moment is the oil market and Iran.

“I agree that the Iran deal has created a potential overhang which depresses crude prices, but I also believe that anaemic global growth is the key driver for oil,” he says.

“With regards to regional investment, Iran – with 80 million people with a median age of 28 and an urban rate of over 70 per cent – is big enough to encourage massive inflow of investment and trade. The country has been a closed economy for many years and like all countries when they open up, massive growth rates are expected. Hopefully with this we may see an Iran as a force for peace and not further conflicts in the Middle East.”

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