Property and equity to drive UAE, says Dubai asset manager

Tariq bin Hendi is one of the new breed of Emirati high flyers being groomed for the next generation of business leadership in the UAE. Educated here, in America and in Britain, he earned an MBA in entrepreneurship and finance jointly awarded by Columbia University in New York and London Business School. He is currently in the process of writing up a doctoral thesis in economics at Imperial College London.

Alongside his studies, he has worked for some of the UAE’s biggest and most important corporations, such as Dubai Holding, Mubadala Development Company and Commercial Bank of Dubai, specialising in corporate advisory and acquisitions work. He has also worked for Citigroup in its London office.

Last year he was appointed chief executive of the asset management division of Emirates NBD, Dubai’s biggest bank, with responsibility for US$3.5 billion of assets and a mandate to “continue building an exceptional asset management business that is the regional benchmark”. He tells The National of the investment outlook in the UAE, amid signs that the crucial oil prices are bottoming out, and against the backdrop of a favourable long-term trend in property prices.

You’ve headed up the asset management arm of Emirates NBD for just over a year now. Can you explain the overall investment strategy in a phase of the cycle when many experts perceive increased risk in global markets?

Yes, it has been an interesting and enjoyable year. I was fortunate to join a business that had been under experienced leadership before I joined and with many talented people already in place. I am now trying to build on these strong foundations and grow Emirates NBD Asset Management in line with Dubai’s and the UAE’s vision for the future. We have some of the region’s finest researchers, analysts and managers. From them we take the best ideas and I then empower our individual teams to make sound portfolio decisions locally, to deliver the returns our clients expect. I’m currently very focused on risk management to ensure we structure our funds wisely and protect our clients’ investments in relatively uncertain times. We are also focused on generating and then using the best research available to ensure we maintain our market leadership.

What asset classes are you involved with? In what proportions in the portfolio? Is one single asset class dominant?

We have a mixture of in-house managed public funds through to tailor-made discretionary solutions, offering exposure to the regional Mena markets as well as global markets. We cover all of the main asset classes, structured on either a Sharia compliant or a conventional basis. Our assets under management currently total $3.5bn, with a reasonably even spread across all of the asset classes, although fixed income remains in the majority for the moment.

Property is often regarded as the bedrock of investment in Dubai and the emirates? What is your view on the current outlook for commercial property in the UAE?

I think that Dubai is well placed to take advantage of our increasingly globalised economy. Oil prices remain an important factor but our feeling is that this is stabilising, and I think we are going to see more corporates seeking to base themselves in the UAE as global companies look to grow into the fast-maturing markets of Asia Pacific and South Asia, as well as the emerging markets of Africa. Dubai is an ideal base for them. Our own property fund is expanding its asset base at the moment and commercial property is a primary focus for us. We believe the best companies will seek the UAE’s best commercial property. We want these assets in our fund and these tenants in our assets.

How do you see the outlook for residential property, where some experts say they detect a potential recovery after a long period of falling prices?

We also have residential property in our fund portfolio for the simple reason that high quality accommodation remains an important factor in recruitment and employee retention. As more companies use the UAE’s unique geographic advantages for their regional and global bases, so demand for prime residential property will grow. We know that sentiment plays its part in determining market fluctuations, but we’re fund managers not property brokers and the long-term trend looks favourable to us.

The world’s stock markets have soared to record levels in the course of the year, despite events such as the UK’s Brexit vote, which had been predicted to knock them off course. How do you see equity markets faring for the rest of the year? What are the factors driving equities?

Well, it has been a long and fairly quiet summer so far and I don’t think the markets will pick up until the final months of the year. But with improved fiscal discipline in the region and stabilising oil prices, we’re confident that equities will be a sound haven into next year. We’ve seen some remarkable inflows of foreign funds into some of the stronger regional equities in the past months in Qatar and the UAE, and it’s also clear that Saudi Arabia is making important strides to open up its equity market to the outside world. We hope this process continues on its current course. The combined value of the GCC equity markets is approaching 5 per cent of the MSCI and that is not a marginal percentage. Viewed in these terms and over the longer term, we feel the trajectory is heading in the right direction.

In bond markets, yields are historically low as some economists predict an increase in interest rates by the US Federal Reserve later this year. Can that trend continue? What do you think will determine Fed sentiment?

As everyone can see, liquidity is easing and flowing into the bond markets. The Fed seems intent on maintaining a dove-ish outlook and so we see this trend continuing. As I have already said, oil prices seem to be stabilising and it’s probable that they’ve bottomed out. This generally causes the bond markets to react favourably. If there is another violent oil price move then that could change bond market behaviour of course, but this doesn’t seem to be on the cards for the moment.

Who are the clients? Who do you wish to attract?

Our clients are predominantly the region’s leading sovereign wealth funds, financial institutions, corporates and UHNW [ultra-high net worth] individuals. From us they simply expect high-quality investment solutions, and as the premier asset manager in the UAE we have a broad array of strategies to meet their objectives. We’re looking to continue broadening and deepening our client base whilst ensuring we maintain the highest standards of performance and governance.

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