Dubai: Dial down the emotion – that’s the messaging Naser Nabulsi wants UAE and regional investors to take up as they look for buy-sell opportunities in what’s proving an extremely testing time for the markets.
Even though the Vice-Chairman of Dubai-based Al Mal Capital PSC, a subsidiary of Dubai Investments, knows too well that taking emotion out from investment decisions can be downright tough. “But the one thing I know for a fact is whatever happens in the short-term, I would say it’ll be a very small correction,” said Nabulsi after his company announced a 4 per cent dividend payout for investors in its UAE and MENA equity funds.
“I’ve been in the markets since 1990, investing in regional, international markets. There’s one thing I’ve learnt – and that’s not to get emotionally attached to the markets. I focus on the long-term approach to investing, and this is where you make money.
“If you look at the wealth that’s generated worldwide, it was only generated after a crisis. Or after corrections. So, this too, is a time to buy, not sell. But humans will go by emotions whenever they see uncertainty.”
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Down, but no panic
Investor sentiments sure are fraught, and naturally so, given what’s happening in the Israel-Hamas conflict. On Wednesday (October 18), all of the GCC stock indices were in the red and mirrored by the FTSE 100 and S&P 500. Apart from the regional situation, the markets are bearing the concerns of any further US rate hikes and what it could mean for economies elsewhere.
But there have been no major rounds of extreme volatility on UAE and Gulf stocks in these two weeks. That in itself is quite a statement on the investors’ part.
“The pricing of Middle East stocks will have that discount because of the geopolitics,” said Nabulsi. “We are used to this, but as long as the fundamentals - the economy, oil price growth are there – we will be in the good.”
“Money, if it goes out of our markets now, it doesn’t matter. It will come back – We are used to that…”
IPOs – and more
Right from the close of Summer, the UAE market is once again talking up the chances for the next round of IPOs. As of now, the crypto-mining firm Phoenix Group has confirmed its stock market float is on the way. The swirl of IPO chatter has also extended to Dubai Taxi and others.
“We’ve been very active in the IPO market in Saudi, the region, in Dubai and Abu Dhabi,” said Nabulsi. “And we were the advisor for Dubai Investments in the Emicool stake sale, which was very successful for them.
“We have had a very good return on equity as a company for the past five years. We’ve been, I would say, giving 10-15 per cent return on equity, and it’s been ongoing for a long time.
“If you look at some other financial institutions, whom I don’t want to mention, they are really having a hard time in raising debt – when they should be paying dividends.
“We have always taken the conservative approach - Al Mal Capital is a zero leverage company, with 50 per cent of our capital invested and the other half held in deposits.
“Al Mal has good exposure in Saudi Arabia and UAE, and in the US, we invested in 24 private companies and have exited 4 of them.”
An IPO for Al Mal
Nabulsi doesn’t completely rule out an IPO run for Al Mal Capital itself. But he reckons the moment is not there yet. “I don’t think the value that we will get is the right one that the company should ideally be having. I call ourselves the jewel of asset management in the region – and yet we are low profile.”
Being out of the market is not the right thing to do, because history has proved it every time that it’s not about timing the market – but time in the market – that delivers.
Create fund of funds
Al Mal Capital is launching a fund of funds, billed as an early-stage venture fund and aligned with ‘one of the biggest VC firms’ in the world, according to Naser Nabulsi.
“This is the time for people to invest in venture funds,” said Nabulsi. “Our plan in the region is acquiring companies, restructure and, maybe, list them.
“If investors can sleep even if they lose part of it because of short-term volatility, they’ll make money in the long term. And if somebody is thinking today that they want to keep their money in cash because the market’s correcting by 20 per cent, all I can say is that every time people do that, the bull market happens, and the market takes on new highs.
“I tell them you can reduce exposures, but being out of the market is not the right thing to do. Because if history shows us anything, it’s that what matters is not timing the market – but time in the market.”
That’s Naser Nabulsi for you – ride out the short-term zigs and zags. And be steadfast on the long-term catching the peaks.