Mark Mobius Picks Emaar, ‘Bombed-Out’ U.A.E. Stocks
Emaar Properties PJSC (EMAAR) is among “bombed-out” United Arab Emirates developers favored by Mark Mobius to rebound after a two-day slump in share prices spurred by the Dubai debt crisis.
“There are many of those properties that are cash-flow rich that are doing quite well,” Mobius, who oversees more than $30 billion of developing-nation assets as chairman of Templeton Asset Management Ltd., told Bloomberg Television in Hong Kong. “Not all the properties are in trouble.”
The MSCI Emerging Markets Index rebounded for a third day, adding 0.8 percent, as concern about Dubai’s debt eased. The worst plunge in the emirate’s stocks in more than a year and record retreat for Abu Dhabi are also luring investors to telephone companies, airlines and port operators they say have become bargains.
Emirates Telecom Corp., (ETISALAT) the biggest operator in the United Arab Emirates, is attractive after falling to its cheapest level since July, said hedge-fund firm Gulfmena Alternative Investments. Dubai-based courier Aramex PJSC (ARMX) will rally after a 7.4 percent drop the past two days left shares at a 32 percent discount to the average price-to-earnings ratio since 2006, according to Duet Mena Ltd.
“Now as the dust settles, a few companies in the U.A.E. stand out,” said Rabih Sultani, a fund manager at Duet Mena in Dubai, a unit of Duet Group, which oversees about $2.1 billion. Sultani said he favors shares of Emirates Telecom, known as Etisalat, Aramex and Air Arabia PJSC (AIRARABIA), the U.A.E.’s largest low- cost carrier.
Dubai, Abu Dhabi
The Dubai Financial Market (DFM) index had tumbled 13 percent in the two trading sessions since Dubai World (Dubai World) said it’s in talks to restructure debt, while Abu Dhabi’s gauge (ADX) slumped 12 percent. Emaar, the U.A.E.’s largest developer, plunged 19 percent.
Dubai World has begun talks with its lenders to restructure $26 billion of debt, less than half its $59 billion of liabilities. That eased concern that a default would add to the $1.7 trillion financial companies around the world have written down as the credit crisis impaired the value of their assets.
The cost of credit-default swaps protecting Dubai debt against a government default fell the most in nine months yesterday after the central bank of the U.A.E. said it “stands behind” lenders to the emirates and Dubai World said it had begun “constructive” talks with banks to restructure $26 billion of debt. Dubai CDS fell 113 basis points to 457, according to prices from CMA Datavision.
‘Bailed Out’
Dubai isn’t likely to go bankrupt and will be “bailed out,” Mobius said today.
The MSCI Emerging Markets Index has gained 4.3 percent this week, rebounding from last week’s slump, on speculation that economies from China to Brazil will continue to recover. Mobius predicted on Nov. 27 that Dubai’s attempt to reschedule debt may spur a “correction” in developing-nation equities, adding that a 20 percent drop is “quite possible.”
Some areas in China and India may become the “next Dubai,” given the liquidity in the two Asian nations, the investor said, citing the cities of Shanghai and Mumbai.
“It wouldn’t be a country-wide situation, isolated pockets of disaster because of over-spending and over-leveraging,” Mobius said. “It’s not going to happen tomorrow but with the kind of money supply that’s coming in, with the IPO activity that we’re seeing, that’s definitely in the cards.”
Posted on Thu 17 Dec 2009 10:40 by Novice_investor
hi...
i dont think so... i can't remember templeton having any middle east fund... i guess they buy middle east through their emerging mkt/asia funds only... and even there i dont remember seeing any country allocation to UAE...
you can check templeton website to confirm if they have any uae/middle east/mena specific funds in the first place...
Franklin Templeton Investments Strengthens Strategic Relationship with Algebra Capital.
Franklin Resources, Inc. (operating as Franklin Templeton Investments) of San Mateo, CA, USA, and Algebra Capital, a leading asset management firm in the Middle East/North Africa (MENA) region, today announced that Franklin Templeton has increased its equity stake in Algebra Capital to 40 percent. The strategic relationship between the two companies was originally established in September 2007 when Franklin Resources, Inc. acquired a 25 percent stake in the company. In addition, William Y. Yun, executive vice president of Alternative Strategies for Franklin Templeton Investments, was appointed as a director of Algebra Capital, joining two other Franklin Templeton directors on the Algebra Capital board.
“This investment reinforces Franklin Templeton’s commitment to Algebra and recognizes the long-term opportunities in the MENA region. Algebra’s experienced leadership team and its strengths in both conventional and Shari’a compliant investing make it a solid strategic partner for our organization,” said Yun. “In addition, we are seeing local and regional investors, including MENA-based sovereign wealth funds, refocusing on investment opportunities closer to home as a consequence of continued volatility in global markets.”
Franklin Templeton’s increased stake in Algebra Capital further strengthens the company’s local asset management capabilities, which also include Brazil, Canada, China, India, Japan and Korea.
“While the credit crisis has not spared our markets, the MENA region remains one of the fastest growing regions in the world with substantial wealth and relatively low levels of leverage – attractive attributes in this uncertain global economy. Algebra’s newly expanded relationship with Franklin Templeton, including Bill Yun’s addition to our board, gives us the financial, distribution and operational means to remain a leading player,” added Ziad Makkawi, chief executive officer and founder of Algebra Capital. “For the long-term investor, we are seeing tremendous investment opportunities in this market environment and Algebra’s local presence and expertise in the region make it well positioned to take advantage of these opportunities.
The MENA region, which includes Egypt, Jordan, Lebanon, Saudi Arabia, Qatar, Oman, the United Arab Emirates (UAE), Bahrain and Kuwait, is the world’s eighth-largest economic bloc. The market capitalization of the MENA region was over US$750 billion as of December 2008.
To date, Franklin Templeton and Algebra Capital have successfully launched and marketed five MENA equity funds worldwide, leveraging Franklin Templeton’s global distribution platform. Franklin Templeton will continue to work with Algebra to develop products that will complement its diversified product range.
About Algebra Capital
Algebra Capital, established in November 2006, operates out of the Dubai International Financial Center (DIFC) and is regulated as a financial services provider by the DFSA. Algebra is one of the leading asset managers in the MENA region, offering listed equities, fixed income and private equity to both regional and international institutional investors. Services are packaged as fund solutions or advisory mandates.
About Franklin Templeton
Franklin Templeton established its presence in the Gulf in October 2000, and currently offers a range of investment funds to eligible retail and institutional investors through Franklin Templeton Investment Management Limited Dubai, which supports its distribution partners across the MENA region. The Dubai office serves also as Franklin Templeton’s regional headquarters for the CEEMEA region.
Franklin Resources, Inc., is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and over US$377 billion in assets under management as of 28 February 2009. For more information, please visit franklintempleton.com.
Posted on Thu 17 Dec 2009 16:07 by Novice_investor
Foreigner wrote:
They have a dedicated middle east and north africa fund, originally run by algebra capital but now in ...
thanks
its a small fund around $28 million... launched last year
Emaar is not a part of the top 10 holding... but the factsheet is dated 31st oct... so cant say whats the positions now..
its called franklin mena fund
Dubai : Mark Mobius continues to have faith in Dubai and the UAE markets as a long-term investment destination, despite murmurs in some quarters that foreign institutional investors are likely to stay away in the aftermath of Dubai World's $26 billion (Dh95 billion) debt standstill request last month.
The executive chairman of Templeton Asset Management, who oversees more than $30 billion of emerging markets assets, dispelled any such doubts when it came to his frontier funds investing in the region, more specifically Dubai.
The steps the Dubai government intends to take as it moves forward came in for much praise from Mobius, hoping that they work on their promise and realise it.
"Saying that they are going to improve transparency and corporate governance are very very good steps," he said.
"So they now got to follow up on that. I think they will. They realise that they have got to move and change."
The crashing of the prices of stocks across the board last month was an opportune time to pile in, according to Mobius, and his asset management company did just that in the right moment.
Investments
During a roundtable discussion with the local media yesterday, Mobius said they are very much invested in the Dubai stock market as well as other Gulf markets and that includes investments in property, financial services, consumer goods and globally diversified companies such as ports.
Thanks.
Dear Friends they say that they are very much invested in the Dubai Stock market ?
My Point is:
Why Mr. Mark Mobius is conducting press conference or press release off and on ?
Either he want the market to jump and he starts offloading?
Or he wants other Fund Manager to join him by investing in Dubai.?
"The crashing of the prices of stocks across the board last month was an opportune time to pile in, according to Mobius, and his asset management company did just that in the right moment."
The above para says the intention, market will hold support untill they get good prices to sell before another oppertunity arrives.
It will be small dips that can happen in this market from around current positions.
I see DFMGI will have an obstacle around 2000 and dip from there and once breaking 2000 it will be a strong rally that has to be in Jan 2010.
After DFMGI 2000, it will be in blocks the upward movement, say 500 points.
Buy the dip. _________________ Take your own decision; and you decide your destiny
When the markets opened after the Eid Al Adha holidays, UAE stocks "bombed out" on the first two days of this month in the aftermath of Dubai World's debt repayment standstill request. But in faraway Hong Kong a fund manager was indeed gleeful.
Mark Mobius and his team at Templeton Asset Management were piling in shares of Emaar Properties (EMAAR) and, also, of some banks in Abu Dhabi. In contrast, closer home, several of the region's fund managers, who were interviewed during that week for a Gulf News feature entitled "Equities still remain the preferred play," were largely shunning stocks of real estate companies and financial services.
Emaar, the Arab world's largest developer, had plunged 19 per cent in those two trading sessions. The Dubai Financial Market General Index had sunk 13 per cent and the Abu Dhabi Securities Exchange Index had slumped 12 per cent during the same period.
Confident that Dubai World (Dubai World) would be supported by the UAE Central Bank to tackle the debt repayment issue, the executive chairman of Templeton Asset Management was far from discouraged by the tumbling prices all around and across sectors.
In fact, it had the opposite effect on him.
"Yes, of course it [the fallout from the debt restructuring issue] encouraged us to come down when prices were going limit down," said Mobius, during a roundtable discussion with local reporters on Thursday. "These were very good opportunities. Opportunities like that don't come very often. And we try to increase our holdings [during such times]."
Going forward, Mobius, who oversees more than $30 billion (Dh110.19 billion) in emerging markets assets, including the frontier markets funds, views Dubai, the UAE, the Gulf region and the wider Middle East and North Africa, in optimistic terms as an investment destination in the longer term.
That should encourage those investors, who are less sanguine about the future of the local markets and, more so, of some sectors which have been set aside because of their weak performance in the aftermath of the global dounturn and real estate correction in Dubai in the past one year.
Investment Guidelines
Sceptical investors have to understand his rationale towards buying any particular stock and in any market for that matter. As he spoke, he kept reiterating on three basic investment guidelines: determine what's the right price for the stock, look at each company on its merit and be invested for the longer term and that to him means three to five years. But he did add later when discussing short- and long-term debt, describing the former as a problem, but that long term debt with companies and governments that have good cash flow should not be a problem.
Talking about the emerging markets, there are two areas which he thinks will perform well.
First is the consumer sector because, he argues, the per capita income is going up at a pretty fast pace in these markets in particular.
"If you look at a billion people in India, a billion people in China, you don't need many of those people to have a higher per capita income to drive an incredible consumption boon," he explains.
The second sector which he believes is going to witness robust growth is commodities.
"We got to be aware of the fact that all of these commodities, whether it be oil, iron-ore, nickel, palladium, platinum — all these prices will continue an upward trend. For that reason, we are focusing on these commodities," Mobius says.
Templeton's frontier funds, a subset of the emerging markets segment, is relatively young and currently only about $200 million is invested in them, he says.
Nigeria and Vietnam are the two biggest markets for his frontier funds. Middle Eastern countries are very much a part of them, with Saudi Arabia and Dubai being the two main ones at this stage, he says. The funds also invest in Abu Dhabi, Kuwait, Oman, Qatar, Libya and Algeria, among others, in the larger Middle East. The privatisation programmes going in Algeria and Libya have piqued his interest quite a bit and he is positive on these two markets.
"By the way, we are putting some of our other funds into Saudi Arabia and Dubai," he adds. "Our investments in them [Dubai and Saudi Arabia] is not only limited to the frontier funds but also to other emerging markets funds. But at this stage, it is really small."
What makes Dubai and Saudi Arabia stand out among the Middle Eastern markets?
Starting with Dubai's debt restructuring issue, he seems to be least worried about it. He feels there's lot of money supply, with the central bank here expected to inject capital when needed as elsewhere. Also, there are a lot of risk takers, he adds.
"We are very, very positive on how Dubai would be able to solve its debt restructuring and we still are very confident," says Mobius, who has often been dubbed by the press as the "emerging markets guru."
In fact, the debt issue that led markets to tumble offered him good buying opportunities from a "longer range point of view".
"Yes, I would say now it's a good environment with prices coming down. Of course, the negative news and the problems will not go away. There will be continuing concern about the debt ratings and so forth and so on," he adds, hoping that moving ahead, debt will be managed prudently.
But does he think, given the latest debt restructuring issue, investors and lenders might shy away. And how long would it take for the markets to get back the faith of foreign investors?
Move towards transparency
He strongly believes Dubai will continue to lead the move towards greater disclosure and transparency.
"The fact of the recent announcement by the Dubai government changes the colour immediately," Mobius says. "If you have this pressure of money supply building up, banks have to eventually start lending again. They must find places to lend and if the credit rating of Dubai and Dubai World improves on the back of their [bond] paying off, then you can have a very fast reversal.
"And now with the interest rates where they are now, many banks in the region, are not paying anything for the deposits — it's zero. So they can lend at three [per cent]. That's not too bad."
It's not the debt level of Dubai that worries him. Concern which is outside the control of Dubai can affect its growth.
"What is of greater concern is the possibility of global trade war — global restriction of trade which would hit Dubai badly," Mobius says. "Because that could lead to lower business for the ports, which is important, low tourism etc. For Dubai, you need an open, a very free flow of goods and people."
But there could be something more inward to consider.
"The other thing I would say is a worry here is any backtracking on liberalisation — if there's any move to become more restrictive, more conservative that would tend to discourage investment."
He also points to a specific weakness: censorship of the media.
"They have got to become more open," he says. "And I realise there are religious constraints and so forth. The degree to which they can become more liberal in that respect will help them in attracting people and attracting ideas and opening up the financial system."
Sectors favoured
So what's he investing in the local and regional markets?
One can't miss property, the Hong Kong-based fund manager says.
"You got to be in property. The other area would be in diversified companies…that are globally diversified like the ports," he says.
Without recommending stocks, he points to the factor that influences him to enter certain stocks or increase holdings in them.
"I can just say that we are increasing our holdings here at the right price. I mean we have certain price constraints," he adds.
He expects a boom in Dubai's tourism and knowledge industries. For tourism to flourish, though, he says, hotels have to be competitively priced.
"I would like to see some hotel rates come down," Mobius says. "If hotel rates come down, then the flow of visitors will increase. $300 a night, $400 a night, it's crazy."
Coming to Saudi Arabia, Mobius reminds us about the tremendous building boom going on there. He is impressed with the efforts the largest Gulf country is making to get its debts paid off, putting it on a better financial footing.
"We think a lot of the massive projects that they are planning will continue to move ahead; with current oil prices at these levels, their income should be pretty good," Mobius says.
Talking about sectors, he says, there are some robust consumer goods companies in Saudi Arabia which are attractive buys.
But as a developing market, there is a concern about Saudi Arabia — one that has been a common refrain among foreign institutional investors for some time now.
"We would like to see Saudi Arabia liberalised so that we can go there directly. Because now we have this problem of going through these P loans [indirectly through swap agreements], which we don't particularly like. They assured us — we were there last week — they would be liberalising."
Don't expect these long term investors buying stock everyday and at higher prices.
When prices are moving up there are smart sellers to use the oppertunities.
Long term investors might build up the holding at attractive prices only but supporting an uptrend which is evident in EMAAR which is having an uptrend low 1.76, 2.25, 2.27, 2.32 like that. That means they are buying into the swing bottoms keeping the uptrend intact. Once the prices slowly builds up and burst off to say 6-7 they will be happy to liquidate.
They will also use the holdings to create apropriate resistance in the short and medium term to help increase the holdings at lower levels.
Investors better go with their approach and add value to the investment by repositioning as appropriate.
Invest long term but service your postions as and when necessary. Build your holdings systematically.
Be with the market, visualise daily, weekly, monthly, quarterly, yearly, 5yearly cylces as necessary.
You have seen EMAAR trading between 1.75 and 5.00 in a year. It would be interesting to do a post mortem of what lead the market to such volatility and when or at what period such volatility to expect in the future. Most of the time you will be able to reach a time frame when to enter the market and when to exit.
If you watch the market it gives you clear indication of the short term trend once established. Volumes at important technical levels are the key to me. _________________ Take your own decision; and you decide your destiny
Actually what happen we get confused all the time. We mix Fundamantal analysis & Tech analysis both together.
In fact they are two different theories.
The more Market fall the more tech analysis says SELL but Fundamentals says it is the lowest BUY or average out suject to the company fundamentals are intact.
In short we have to draw a line between them and play accordingly.
I very less likely follow the Tech. but I firmly beleive on the charts. They work.
Similarly I am too interested on who is buy & why is buying or who is selling & why is selling.?
My approach works many times that is why I am still in. Other wise I must have been evaporated.
Actually what happen we get confused all the time. We mix Fundamantal analysis & Tech analysis both together....
Most of the time technical analysis absorbs fundamental analysis.
Fundamental analysis is required for investments to select stocks and compare stocks within sectors etc.
Technical analysis is helpful to decide right time to buy or sell a stock or to decide what price is good at a given period of time to buy or sell. _________________ Take your own decision; and you decide your destiny
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Disclaimer: Investing in stocks is risky, you can lose some or all of your money and/or other assets. Anything you read on this site should be regarded as the opinion of the author only and is not to be taken as advice to buy, sell, or hold stocks and/or any other investments. Seek professional advice and do your due diligence before making investment decisions. In particular, do not assume anything you read on this site is correct or accurate. You should accept that only you can be responsible for any investing decisions you make.
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