Dubai: Equity market investors in the UAE are seeking greener pastures overseas stocks, triggered by underperformance of local indices, which witnessed volatile swings late last year, wiping of billion of dollars of investor’s money.

The Dubai Financial Market General Index has been witnessing high volatility along with crude oil. The DFM General Index extended gains to end at 3,842.60, after gaining almost 5 per cent.

The Dubai index was the best performing market until early December, but gave away almost all gains at one point, only to end the year 12.69 per cent higher.

“Customers executing business outside the region has been on the rise. We are acquiring more customers as we give people a way to hedge their exposure if and when local markets start underperforming because of lower oil prices,” said Abdel Malik Kanawati, the chief executive at Mubasher.

“Traditionally the most actively traded market outside the local market has been the US, mostly the top 500 companies. We have seen almost 100 per cent growth in volumes year on year,” Kanawati.

The brokerage have also been providing the overseas products to their clients.

“It is a very strong part of our volumes. US has been growing very strongly. The institutional clients would had taken the exposure with global brokers, but now we have a strong position to say here’s a US product or from Hong Kong or Singapore, if they want exposure,” said Salim Sebbata, head of private clients, Mubasher Trade.

On the other hand, the US equity market indices hit a record high in late December. The Dow Jones Industrial Average hit a record high of 18.103.45 in late December, and the US index may continue to perform strongly in 2015, according to BlackStone, the world’s biggest money manager.

“A growing economy, fuelled by housing and capital spending and favourable earnings, would enable the Standard & Poor’s 500 to increase 15 per cent during the year, outperforming equities in most major industrialised countries throughout the world,” said Byron R. Wien, Vice Chairman, BlackStone.

The United States, which triggered an economic recession in 2008, has been on a recovery path with robust GDP growth and recovering labour market.

“There is a bit of pick up in optimism in the United States. We have been bullish on US assets over the last two years and our investment portfolio has been heavily rated towards United States,” said Arjuna Mahendran, chief investment officer at Emirates NBD.

“The survey of purchasing managers, who buy raw materials for companies, their intentions are leading indicators of how manufacturing will do in the future, Those indices they may see an upswing in terms of manufacturing activity,” said Mahendran.

Investors have been piling into US assets as the Federal Reserve pledged patience in raising interest rates and data showed the economy grew the most in the third quarter since 2003. A US manufacturing index maintained expansion in December, economists project.

Bullish on Egypt

“We have seen big inflows into the Egyptian and Kenyan markets and some inflows into Morocco. These are international flows that have come in to markets as they stand to benefit from drop in oil prices. So any Africa focused fund, will shift out of countries which are heavily exposed to oil and switch over to other countries,” Sherif Salem, fund manager at Abu Dhabi-based Invest AD, who manages Invest AD Emerging Africa fund worth $50 million, told Gulf News.

“In Egypt, investors have been a mix of institutional, retail, and a mix between Arab and western. The Egyptian economy is less dependent on oil so it stands to benefit from that,” said Salem.

Crude oil prices decreased more than 50 per cent after Opec maintained output to counter the shale production in the US, but the fall in prices have befitted many consuming countries like India, China Indonesia, and Egypt.

The Egyptian EGX 30 price return was the best performing regional market last year, with more than 30 per cent gains followed by Qatar.

Mubasher is overweight on Egypt. Egypt’s fiscal deficit reached a peak of 13.8 per cent of GDP in 2013 and eased down to 12.4 per cent last year, thanks to much of the financial aid coming from the GCC countries.

The tight fiscal policy pursued by the government had its repercussions on prices while analysts expect inflationary pressures to ease over the medium to long run, as production in different industrial and services sectors returns to normal levels.

The last milestone in Egypt’s political road map is the parliamentary elections, that are expected to be held before the end of March 2015. About 40 projects are expected to be revealed in that summit, aiming to attract $10-12 billion in investments.

Moreover, $100 billion of foreign investments are estimated to are estimated to form the Suez Canal Corridor, encompassing new projects in the fields of advanced logistics and industrial services as well as commerce, tourism, information technology, agriculture, and real estate.

“The bullishness in Egyptian equity markets has to do more with stability brought about by the new government and more investor friendly environment,” said Saleem Khokhar, head of equities at NBAD’s asset management group.