US debt issue weighs down an otherwise positive reporting season

Marwan Shurrab, fund manager with Vision Investments and Holdings, offers his outlook.

Marwan Shurrab, fund manager with Vision Investments and Holdings, says the insurance sector has always underperformed the market. Duncan Chard for the National

What is the asset class and geography you are focused on?

The asset classes I trade are equities, fixed-income and structured products. Geographically, I focus on North Africa, the Arabian Gulf, the Levant and emerging markets – China and India especially.

What is the outlook for the month ahead?

My outlook is positive with a cautious approach with regards to any economical surprises that would arise from abroad. We are going into the third-quarter earnings season. Expectations from the market are positive ahead of companies’ [earnings] releases from October to November. The market will be taking this into consideration and pricing it in.

What are the main risks, either upside or downside, to the outlook?

The downside risk is the United States budget issue and debt ceiling coming into effect. Another is the potential escalation of violence in the Middle East. The upside is that the third-quarter announcement will bring a catalyst to the market. The Expo 2020 will also be announced in November, in which Dubai is a candidate.

What is the best investment at the moment?

I'm banking on Arabtec Holding, Drake & Scull International (DSI) and Air Arabia. I like Arabtec due to the fact that the formation of a joint venture with Samsung is extremely beneficial on a contract basis, and expectations are huge for that entity, with entry of high yields from contracting in oil and gas.

With regards to DSI, it’s because it’s been a strong recovery year in terms of numbers, and expectations are high for the end with the stock being a potential acquisition target, which would help the performance going forward. Air Arabia is one of my clear fundamental favourites, and a key beneficiary of regional neighbours and … if Dubai wins the [bid to host] Expo 2020.

What was the best investment you were ever involved in?

Sorouh Real Estate. At the end of 2012, I was extremely bullish on Sorouh. I benefited aggressively from the merger … the valuation favoured Sorouh's shareholders. I made over 150 per cent on that investment.

What was the worst?

The insurance sector in the UAE is very disappointing due to the fact that it has always lagged and underperformed the market.