US-based Ninety One’s fund buys UAE stocks to dodge trade war

Ninety One Plc. says it’s buying stocks from the United Arab Emirates as demand surges for investments that are less exposed to Donald Trump’s trade war.

The firm’s emerging-markets equity team, which manages $11 billion in assets, is favoring the UAE as it seeks out “uncorrelated markets” to US tariffs, according to Varun Laijawalla, co-portfolio manager for EM equities. It’s been adding UAE-listed shares including real estate developer Emaar Properties PJSC and lender Abu Dhabi Commercial Bank PJSC, he said.

“UAE is doing the opposite to what the US is doing, signing agreements with trading partners and opening its borders to immigration,” Laijawalla said in an interview in London last week. “Is it sort of an escape trade, somewhere to hide? Yes, definitely. It has its own idiosyncratic drivers that will not be necessarily influenced by US policy.”

The fund co-managed by Laijawalla and Archie Hart, called American Beacon Ninety One Emerging Markets Equity Fund, has returned 13 per cent over the past year, outperforming 95 per cent of peers, according to data compiled by Bloomberg. Laijawalla said that it has been increasing exposure to the UAE since November, the month Trump was elected.

Besides the focus on the UAE’s property and banking sectors, another addition to the portfolio earlier this year was food delivery company Talabat Holdings Plc, whose $2 billion initial public offering late last year was the largest in the Middle East and the biggest technology listing globally in 2024.

Talabat shares have had a rocky start since the company’s December debut in Dubai, with the stock still trading at about 10% below offer price.

The EM fund’s biggest holdings are still stocks from China and India, combined representing roughly 40 per cent of the total portfolio. Xiaomi Corp. was the largest contributor to returns in 2024, with food delivery company Meituan and online travel agency Trip.com Group Ltd among other Chinese stocks Ninety One is invested in. Meituan is preparing for a potential entry into the Middle East, its first expansion beyond China.

Laijawalla said that three months ago he added shares of Turkish defense contractor Aselsan to the portfolio, because the company “is benefiting from a theme that the rest of Europe is benefiting from, which is defense. Its ex-Turkey revenues are growing faster than the Turkish revenues.” Aselsan shares are up 62 per cent so far this year.

The firm is 3 per cent overweight the UAE compared with the benchmark MSCI Emerging Markets index, Laijawalla said, making it “one of our larger overweight exposures.” UAE stocks have the fifth largest weighting in the MSCI benchmark index outside Asia.

The MSCI index is up 4.1 per cent so far this year, outperforming the S&P 500’s 4.1 per cent loss. UAE stocks in Ninety One’s portfolio are trailing the EM benchmark, with Emaar and Talabat each up about 2 per cent, and Abu Dhabi Commercial Bank up just 0.6 per cent.