Sell emerging market stocks and buy US equities, get rid of corporate bonds and take up income funds, ditch green energy stocks and invest in nuclear energy - this was just some of the investment advice given to attendees of Holborn Assets' financial planning seminar that was held on Monday at the Friends Provident International office in downtown Dubai. The free seminar was part of a monthly series organized by the financial services firm for Dubai expatriates. "The seminar was organized to create awareness in the expat community about what is happening in the world of investment, what's happening in financial markets, what the drivers are, and what's causing the growth and fall of markets," said Philip Parker, chairman of Holborn Assets.
The 50-minute programme, which was attended by about 25 people, also provided detailed investment advice and touched on international taxation laws that affect expatriates' investment income. Since October 2009, the seminars, which all focus on investing but tackle different issues each month, have been led by Chris Regan. Previously the director of Barclay's Independent Financial Advisers in the UK, Mr Regan now runs his own successful financial services company in the UK called Fluent Independent Financial Advisers and works with Holborn.
Mr Regan said that since the recession, many Dubai expatriates are struggling to figure out how to recover their losses and decide which markets are the right ones to enter. "One of their concerns is where they should go with their finances going forward," Mr Regan said. In the seminar on Monday, Mr Regan explained that most indicators - such as consumer spending, commodities, gold and the FTSE 100 - show improvements and likely meant that the world is coming out of a recession and markets should be improving.
"Generally speaking, it is a good time to invest, but you have to do it carefully," he said. "One of the things people tend to do is jump on the bandwagon when everything is over, and then you get a double dip, and then people lose money. Caution is what people need to understand when it comes to investing going forward." He added that people should understand that generally there are no "quick bucks" to be made anymore. Instead, they should focus on medium to long-term investments. But before doing so, they need to consider what they're getting into, and why.
"Have a good think about what you're getting into, and do your homework," Mr Regan said. He advised going to experts, such as fund managers, who understand what's going on in the marketplace. In addition, he said investors need to consider the sustainability and durability of their investments. "Does it have legs? Is it something everyone wants, and will always want?" are questions investors should ask, said Mr Regan. "A product like Coke is a great investment because it is tangible, unique, in demand, cheap to produce and has massive earning power."
Another consideration to keep in mind is whether the stock is sensibly priced, and whether it will have an upside and make money, Mr Regan said. "There are a lot of cheap stocks out there right now, but if they won't make you money, there's no point." So what kinds of stocks should people be investing in now? And what stocks should they be selling? According to Mr Regan, investors should be investing in agriculture.
"What's not been oversold is this market," he said. "Commodities such as wheat were down last year, so I see potential for growth in that market in the future." In addition, he says it might be time to crystallize profits from emerging markets, as there may not be much more room to grow in the short term. "Everybody loves emerging markets. They grew by 67 per cent last year, but how much can a market grow? It still grows, but not as much. You could be making more money elsewhere."
He said the US is set to get stronger and will come out of the recession faster than the UK, so it is worth taking a look at. Other good investment choices, according to Mr Regan, are cash-rich tobacco firms, pharmaceuticals and supermarkets. These kinds of stocks always perform well as people always have a need for their products, he said. Another good bet is to invest in nuclear energy, rather than green energy. "Generally, people buy green but don't make any money on it," Mr Regan said. "As much as the governments around the world like to say they're not interested in nuclear energy because it's wrong, the reality is they're all going to do it and that's where our energy is going to come from in the future."
Oil producers are also good investments, while oil consumers are not. Oil prices will continue to rise, said Mr Regan, and whenever this happens, oil consumers ? such as airlines ? suffer because they depend on oil prices. In terms of currencies, Mr Regan advises investors to sell the euro, as it is overvalued, and to buy the US dollar. "The dollar fell 10 per cent in 2009, but has bounced back by 3.5 per cent since December of last year."
At the seminar, Mr Regan also discussed specific investment strategies. One option is to invest through a world investment opportunities fund, in which fund managers give advice from the country that was invested in. "They have a better knowledge of what's going on on the ground, and they react accordingly. It's a much more strategic way of financial planning rather than simple, more conventional investing."
For individuals who like to be more involved with their money, a good option is to use discretionary managed services. A manager looks after the investor's money, but the investor plays an active role in what the manager does with the portfolio. "You talk about opportunities, discuss strategies and what you want to achieve, and investments are designed around your lifestyle," Mr Regan said. Maria Chia, a Filipina expatriate who works as a trainer at the Emirates Aviation College, said she found the seminar helpful and informative. "I learned things I didn't know about, such as certain tax laws and new investment vehicles. Now I want to learn about these vehicles in more detail."
Shiv Iyer, a 34-year-old from India, who works as a software sales professional at LS2 Consulting in Dubai, said he also found the seminar informative, and felt it was a good opportunity to interact with knowledgeable people. "However, I wanted to learn more about investment opportunities in the region that are outside of real estate," he said. According to Mr Reagan, the property market is a good sector to invest in for the long term, but not if investors are looking to make quick cash. As for Dubai's stock market, he said to proceed with caution.
"I think we're edging towards a recovery, but it's unlikely it will be before the end of 2010."