Emirates NBD sees cash and gold among top investments for 2019

Bank forecasts challenging decade ahead for investors compared to previous 10 years

Maurice Gravier, Chief Investment Officer, of Emirates NBD Group, says oil prices are expected to reach an average of $65 per barrel in 2019.

Emirates NBD, Dubai’s biggest bank, said gold and cash top the list of its preferred asset investments this year, while emerging market equities are attractive in the long term.

Well selected hedge funds and a diversified portfolio of emerging market bonds, particularly in the Arabian Gulf, denominated in US dollars with some local currency, are among the top investment picks, according to the Emirates NBD investment outlook 2019 report on Sunday.

“Cash - in AED or US dollars - is back as a yielding asset but also provides flexibility, which is the ability to seize opportunities when they arise,” said Maurice Gravier, chief investment officer at Emirates NBD. “Our approach might change as opportunities appear and disappear with volatility.”

The UAE’s second-biggest lender expects the next decade will be more challenging for investors than the past 10 years, which calls for a greater need to select the right securities after years of passive investments.

In terms of fixed-income assets, the GCC bond market is a “compelling proposition” with ample investment opportunities in sovereign bonds, said Syed Yahya Sultan, head of fixed income strategy at Emirates NBD.

Developed economies may start to experience recessions within the next five years but 2019 "is safe", Mr Gravier said.

However, the Middle East has "self-sustaining drivers" of growth, particularly Saudi Arabia's ambitious economic reform plans, as a gateway to Africa and Europe and with the dynamics of a young population, he said.

An expected interest rate increase by the US Federal Reserve will not have a negative impact on economies whose currencies are pegged to the dollar, such as the UAE, and the higher cost of funding will be "digestable", Mr Gravier said.