The most sophisticated currency trade I've ever made took place at the airport several weeks back, after I found a few stray Egyptian pounds stuffed in my pocket while returning from Cairo. I slid the 100 pounds or so under the glass at the currency exchange counter. The man pounded on his calculator for a bit, and he handed me about Dh65.
In my world, that qualifies as high finance.
I was thinking of that episode the other day when I had an occasion to sit down with two gentlemen in the business of advising people whose net worth includes several more zeroes than my own.
Their overall analysis would likely lift the spirits of regional investors of all sizes. "There is too much gloom and doom" in the markets, proclaimed Giles Keating, the head of global research with Credit Suisse.
Mr Keating, who is based in Zurich, was in Dubai spreading his message that the naysayers are reading the global economy all wrong and that this year would see a "robust" recovery in most asset classes.
His colleague Kamran Butt, the Credit Suisse head of Middle East equity research, issued a similarly sunny prognosis for the regional economy, predicting that the UAE will post non-oil GDP growth this year despite the downturn.
But I was struck by Mr Butt's comment when asked what he was hearing most frequently from his wealthy clients.
"The theme of diversification is really quite prominent," said Mr Butt.
For most retail investors, diversification means building a portfolio with a mix of stocks and bonds, or at least investing in mutual funds instead of only individual stocks (there remain those who consider themselves fully diversified if they charge evenly among their Visa and MasterCard).
Mr Butt, however, was talking about the increased appetite among investors for alternative plays such as currencies and commodities.
The numbers bear out the trend: the Dubai Gold and Commodities Exchange (DGCX) in February saw a 146 per cent spike in volumes compared to last year, while the Dubai Mercantile Exchange posted a record level of future contracts outstanding.
This is notable, as many local investors have been content to ride the rising tide of oil prices and property values that has lifted almost all boats in the past decade. Now, however, it seems they are pursuing more hedging strategies that could limit the stomach-churning volatility of late.
There are several factors at play. One is that other asset classes are - let's put it charitably - less attractive than they have been in recent years. Local equity markets are sluggish, with depressingly low volumes, and it takes a cast-iron stomach to wade into the property market at the moment.
Another is that experts like Mr Keating and Mr Butt see weakness in the US dollar on the horizon. "Our mid-to long-term view remains fundamentally that the dollar will be on a bearish trend," Mr Butt says.
This is especially significant for UAE residents, given that the value of the dirham is pegged to the dollar. As a result, some local investors who think they are adequately diversified "don't always notice the actual currency exposure they have", Mr Butt says. The move to non-dollar-based assets, like commodities and foreign currencies, is their attempt to achieve a better balance. In this region, most savvy investors are familiar with how to trade commodities, particularly oil and gold.
Currencies are another matter. For example, when talking with the Credit Suisse guys, they recommended owning euros and Swiss francs, as well as a selected basket of currencies from emerging markets, including the Brazilian real, Mexican peso and Indonesian rupiah. Fair enough, that sounded perfectly sensible.
Still, I walked out wondering if most retail investors are about as experienced in currency trading as I was returning from Cairo.
But after a few conversations with the experts in the field, I identified several relatively straightforward methods of playing the foreign currency market, or forex as those in the know like to call it.
Perhaps the easiest is through an exchange-traded fund, or ETF. This is basically a mutual fund that trades like a stock in that its value changes throughout the trading day. For instance, those looking to hedge against the falling dollar might want to look at the Powershares US Dollar Index Bearish Fund, which "shorts" the dollar by trading in the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Another option is to find a broker who listed on the DGCX, of which there are more than 140.
The obvious allure is that you benefit from the advice of a professional who actively monitors the forex market on a daily basis.
"If you are not that sophisticated, you should be working very closely with a broker," Eric Hasham, the chief executive of the Dubai Gold and Commodities Exchange, told me.
One potential pitfall of working with a broker is the cost involved, as most will charge fees for each transaction (most ETFs, by comparison, charge minimal fees).
Mr Hasham says brokers will establish an online account for experienced currency traders capable of identifying and executing trades on their own. The average investor should stick with an account that requires the broker to place the trade on the client's behalf, providing a safeguard against pursuing a trade without the client understanding the risk involved. About 90 per cent of brokers registered with DGCX are based in Dubai, but some have branch offices in Abu Dhabi.
A third option is a so-called structured product. This is basically a custom-designed vehicle developed by a bank to achieve a specific goal such as, to name the relevant example, hedging against the dollar. As Mr Butt noted, these investments have garnered a fair share of bad publicity in recent years, largely because some that were sold as practically risk-free imploded in the bear market.
But Mr Butt says a well-designed structured product remains the most effective way to participate in the upside of a currency strategy and still protect against losses if the expected trend does not materialise. These vehicles are often available only to high-end investors with minimums of tens of thousands of dollars.
Overall, Mr Hasham's advice is sound, that it is "highly important that investors understand the product they are trading and the risk of the environment they are trading in".
That brings me to a final option: stick with hard currency. If you're angling to diversify, you can always simply take a wad of dirhams or dollars down to the bank or an exchange house and swap it for a currency that you think is better positioned. Should the dollar fall, you could collect a tidy return.
It's a variant on the old "cash under the mattress" investing method - the cash is just of a different colour.
breagan@thenational.ae
MO
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UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
What is Folia?
Prince Khaled bin Alwaleed bin Talal's new plant-based menu will launch at Four Seasons hotels in Dubai this November. A desire to cater to people looking for clean, healthy meals beyond green salad is what inspired Prince Khaled and American celebrity chef Matthew Kenney to create Folia. The word means "from the leaves" in Latin, and the exclusive menu offers fine plant-based cuisine across Four Seasons properties in Los Angeles, Bahrain and, soon, Dubai.
Kenney specialises in vegan cuisine and is the founder of Plant Food Wine and 20 other restaurants worldwide. "I’ve always appreciated Matthew’s work," says the Saudi royal. "He has a singular culinary talent and his approach to plant-based dining is prescient and unrivalled. I was a fan of his long before we established our professional relationship."
Folia first launched at The Four Seasons Hotel Los Angeles at Beverly Hills in July 2018. It is available at the poolside Cabana Restaurant and for in-room dining across the property, as well as in its private event space. The food is vibrant and colourful, full of fresh dishes such as the hearts of palm ceviche with California fruit, vegetables and edible flowers; green hearb tacos filled with roasted squash and king oyster barbacoa; and a savoury coconut cream pie with macadamia crust.
In March 2019, the Folia menu reached Gulf shores, as it was introduced at the Four Seasons Hotel Bahrain Bay, where it is served at the Bay View Lounge. Next, on Tuesday, November 1 – also known as World Vegan Day – it will come to the UAE, to the Four Seasons Resort Dubai at Jumeirah Beach and the Four Seasons DIFC, both properties Prince Khaled has spent "considerable time at and love".
There are also plans to take Folia to several more locations throughout the Middle East and Europe.
While health-conscious diners will be attracted to the concept, Prince Khaled is careful to stress Folia is "not meant for a specific subset of customers. It is meant for everyone who wants a culinary experience without the negative impact that eating out so often comes with."
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
UAE currency: the story behind the money in your pockets
ESSENTIALS
The flights
Emirates flies direct from Dubai to Rio de Janeiro from Dh7,000 return including taxes. Avianca fliles from Rio to Cusco via Lima from $399 (Dhxx) return including taxes.
The trip
From US$1,830 per deluxe cabin, twin share, for the one-night Spirit of the Water itinerary and US$4,630 per deluxe cabin for the Peruvian Highlands itinerary, inclusive of meals, and beverages. Surcharges apply for some excursions.
THE LIGHT
Director: Tom Tykwer
Starring: Tala Al Deen, Nicolette Krebitz, Lars Eidinger
Rating: 3/5
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Profile box
Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Day 5, Dubai Test: At a glance
Moment of the day Given the problems Sri Lanka have had in recent times, it was apt the winning catch was taken by Dinesh Chandimal. He is one of seven different captains Sri Lanka have had in just the past two years. He leads in understated fashion, but by example. His century in the first innings of this series set the shock win in motion.
Stat of the day This was the ninth Test Pakistan have lost in their past 11 matches, a run that started when they lost the final match of their three-Test series against West Indies in Sharjah last year. They have not drawn a match in almost two years and 19 matches, since they were held by England at the Zayed Cricket Stadium in Abu Dhabi in 2015.
The verdict Mickey Arthur basically acknowledged he had erred by basing Pakistan’s gameplan around three seam bowlers and asking for pitches with plenty of grass in Abu Dhabi and Sharjah. Why would Pakistan want to change the method that has treated them so well on these grounds in the past 10 years? It is unlikely Misbah-ul-Haq would have made the same mistake.
The%20specs
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