Srishailan GS, vice president for treasury and capital markets at Invest AD
Years trading: 21
Based: Abu Dhabi
What asset class and geography do you focus on?
I invest into GCC money markets and local and international foreign exchange markets. I am also involved in hedging with global futures.
What is the outlook for the month ahead?
As the price of oil is forecast to stay low, I expect marginally bearish sentiment in the equities market for some time. The oil price will have a significant impact on international markets, especially in the GCC, where markets are particularly dependent on oil revenue. With regard to money market funding, liquidity is ample and we do not anticipate any fiscal tightening for some time. The tightening at the end of December was mainly a result of central banks temporarily boosting balance sheets. Following this, we are already witnessing a return to normalcy and the lending rates between institutions have moved closer to benchmark rates. And in the foreign exchange market, the US dollar remains strong, with more strength expected in the coming months. Most emerging market currencies suffer from systemic fiscal and monetary problems and are susceptible to weakness in the future. However, these markets have been given a brief respite because of the US Federal Reserve’s delay in increasing interest rates.
What are the main risks, either upside or downside, to the outlook?
On the upside, there could be an equity rally if the price of crude stabilises then starts rising. Long-term investors will look to buy into value stocks at these levels following their pullback. This should provide overall stability to the GCC markets outlook. The main risk to the outlook is that crude prices remain low for a prolonged period. This could defer government spending on new projects, reduce international investment into the region and push equity prices lower, resulting in a negative long-term effect on the growth of the economy.
What is the best investment at the moment?
I would be tempted to tell investors to remain long in cash and wait for the market to consolidate, as the US dollar’s upward rally is expected to continue into this year and beyond. The only caveat to this strategy is that the US economy is not as strong as it was in the late 1990s and has some loose links. Emerging markets have lost steam and are still vulnerable to any US interest rate hikes. At the moment investors can find opportunity in base commodities, where there is value because of the current slackness in global growth.
What was the best investment you were ever involved in?
There have been quite a few of them, but the one that comes to mind is a commodities trade. Our internal technical strategist’s view was bang on target.
What was the worst?
Although we have made very good decisions on commodity trades, we did not act aggressively on them. However, like they say, there is no such thing as a missed opportunity in the market, and opportunities keep arising. It is up to us to pick the ones that suit our books and make the most of it.
dalsaadi@thenational.ae
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