The financial crisis has forced GCC investors to grow up and become more rational and disciplined about their expectations, one of the UAE’s leading bankers has claimed.
“GCC investors have learned some painful but valuable lessons over the last two years,” Al Mal Capital CEO Nasser Nabulsi told Arabian Business.
“Namely, volatility can kill you, liquidity is always more important than you think it is, and the benefits of diversification are most apparent in a bear market. Like a teenager unwillingly thrust into adulthood, the global financial crisis forced the GCC investors to grow up very quickly.”
Nabulsi said that a renewed sense of caution had led to investors seeking a better understanding of the types of products they were using to manage their wealth, which he described as a positive development.
The Al Mal CEO also indicated that investors had tended towards shorter investment time horizons than their global peers.
“It is fair to say that investors over the past couple of years have become more hesitant to lock up money and commit to long term investing programs such as private equity funds, and have become more control-oriented and direct in their approach,” Nabulsi added.
“This is a function of the experience of the past cycle and understandable from a human nature standpoint.”
A May 2010 report on the Gulf asset management sector by Invesco also reported that both retail and institutional clients tended towards investment horizons of less than five years.
On the sovereign wealth fund front, Nabulsi said that the recent volatility had meant that funds had tended towards primary issues, such as Qatar Investment Authority’s recent stake in China’s Agribank.
“But I think it’s very hard to call it any further down the line on where the [SWF] investments are going to be because of this volatility,” he added.
With regard to his own firm, Nabulsi said that the type of work Al Mal carries out and its competition have both changed as a result of the crisis.
“Obviously, brokerage volumes are down, and there are less real estate deals and IPO-style transactions in the region. That was to be expected, but at the same time there has been a pick-up in restructuring related work, fixed income investments, and asset management,” the CEO stated.
“As for the competition, that’s where things have notably changed. The fast money has left the market. That has worked – and we believe will continue to work – in our favor as we build our regional presence.”