What is next for financial markets?
In this exclusive interview, Fathi Ben Grira, CEO, Menacorp talks about financial markets and advises investors in the GCC to take advantage of currencies variations.
What would you say about the performance of Abu Dhabi Stock Exchange and the Dubai Financial Market?
These two markets witnessed a very strong growth in 2013 and 2014. The correction we expected for 2015 happened but it was amplified by external factors such as the drop of oil price, the geopolitical context of our region, a strong dollar and the repercussions of weaker growth in emerging economies. 2016 didn’t start well in terms of performance but we noticed that smart investors were taking advantage of cheaper valuations. Things got better during the past weeks. In a nutshell, I would say that these markets offer good opportunities for all those who believe in a strong fundamental story.
With talks over a new financial crisis do you think the region could be in jeopardy?
Our region is not isolated from the rest of the world and it is natural that we have to face repercussions when there are global challenges to be tackled. The financial crisis is a reality: global markets have been under serious pressure and undesired ripple effects are occurring in various sectors and industries. However, I would not say that it can jeopardize the future of our region. On the mid and long term, we offer one of the most exciting opportunities in terms of growth.
What do you expect from emerging market stocks this year?
Even if emerging markets have been characterized mainly by gloomy news, smart investors are seeing opportunities and have started to cherry pick and accumulate the undervalued stocks of companies with sound businesses and good management. Opportunities are around the corner for those who are willing to do their homework correctly and who will not be afraid to face strong volatility during the coming months.
Are there any particular challenges asset managers are encountering at the moment?
The biggest challenge is without any doubt the massive redemptions triggered by most of the prominent sovereign wealth funds following the drop in oil price. The ripple effect of this shift is yet to come and should not be underestimated due to its scale.
How did Menacorp come out of 2015?
Despite the various challenges the financial services industry had to face in 2015, our company performed really well. We maintained our leadership as the best securities brokerage firm in the United Arab Emirates by being notably ranked first in terms of market share among 49 competitors on the Dubai Financial Market, the main exchange of the country. With the massive drop in oil price and the instability of the region, our markets were in for a roller-coaster ride. We are proud that investors on UAE markets massively chose our company for their investment needs during this challenging period. This is the third consecutive year that we are the leader and we occupy the same position year to date for 2016.
Where are you standing in the UAE financial market today?
Our company occupies a unique position compared to its 48 competitors, notably because of its size on one hand and its independence on the other hand. The UAE securities brokerage firms can be divided mainly into two categories between brokerages owned by large banks and small independent brokerages with limited capabilities. We are a different kind of player as we have enough scale to have the same capabilities than the large banks but we also offer the personalized and flexible solutions that clients are looking for when they deal with an independent firm.
As a result, our firm can count on a very wide and diversified base of clients comprised of financial institutions, corporations, family offices, high net worth individuals and government bodies. This diversity has a direct consequence on our income structure, meaning that none of our clients represent more than 2% of our total revenue which is a great plus for our risk profile.
Another important differentiator is that Menacorp is the only company to be licensed to operate on the four exchanges of the United Arab Emirates (Abu Dhabi Securities Exchange, Dubai Financial Market, Nasdaq Dubai and Dubai Gold and Commodities Exchange) and to be authorized to provide access to regional markets (including Saudi Arabia) as well as international markets by the UAE Securities and Commodities Authority. This makes us a one-stop-shop for our clients.
What would be the piece of advice you could give to GCC investors for this year?
Stick to the fundamentals and stay away from speculation. Make sure that your portfolio is well diversified and take advantage of currencies variations.