| marcusevans.com | meai-summit.com | |||
 |
summits
|
||
29-31 March 2010
Park Hyatt Dubai, UAE |
|||
Ala’a Al-Yousuf Interview
|
|||
Investing in alternative investments has often been considered for diversification and portfolio optimisation reasons. Nevertheless, no region has been spared the brunt of the financial and economic crisis and the Middle East was no exception, with Dubai, the region’s real estate superstar losing its shine. Dr Ala’a Al-Yousuf, Chief Economist at the Gulf Finance House recommends that alternative asset class investors in the region should prepare for forthcoming monetary policy and regulation changes. A speaker at the marcus evans Middle East Alternative Investments Summit 2010 taking place in Dubai, 29 – 31 March, he discusses the critical issues related to investors investing in alternative asset classes in the region. What are your projections for 2010? Dr Ala’a Al-Yousuf: This is going to be a transitional year for economies and financial systems worldwide. Investors, especially those investing in alternative asset classes, need to be careful about policy shifts, in particular the monetary policies that are being set by the major central banks and the financial regulatory aspects that are being considered. We have also recently heard President Obama’s statements on controlling banks’ risky operations by separating proprietary investments from traditional banking operations. These shifts in policy and thinking will be very important in determining asset returns and performance of Middle East Investments. As the Gulf states peg their currencies to the US dollar, the most relevant monetary policy to the region is what happens in the US as dictated by the Federal Reserve. And of course financial markets are interlinked; therefore what China, the UK and the European Central Bank do are all important for liquidity, price of credit and availability of funding. In terms of monetary policy, in the second half of this year some central banks will start tightening monetary conditions for investors. Financial markets will start feeling the withdrawal of liquidity that was injected to prevent the financial crisis from leading to a global depression. The US Fed will start doing this and other central banks will follow suit. This should be done very carefully so as not to lead to further financial turbulence. In the fourth quarter, I expect interest rates to go up, perhaps starting with the US Fed and the European Central Bank, but I do not think the Bank of Japan or the Bank of England will raise interest rates yet. 2010 will be a turning point going from recession prevention policies to more sustainable fiscal and monetary positions, to prevent inflation from returning and to start addressing the deficits and mounting public debt in the major economies. What strategies would you recommend to investors of alternative asset classes? Dr Ala’a Al-Yousuf: One of the first things that investors of alternative asset classes need to do is enhance their risk mitigation strategies and preserve capital; the second priority should then be to achieve reasonable returns on capital. Investors in high risk high return alternative asset classes need to be very watchful. In addition to monetary policy changes, there are discussions about better regulation. One of the things that led to the crisis was innovation in financial systems that were little or not understood or regulated by supervisors. There will be measures introduced by global regulators and bodies to address that. Although these reforms will not be put in place in 2010 or even in 2011, there will be preparations, discussions of details, and some thinking will start to evolve, with expected implementation by the beginning of 2012. There will be many reforms affecting financial institutions, private equity houses, investment banks and hedge funds, and the effect of all these changes will make the financial system more stable. They will also perhaps affect returns, as the leverage that was common before the crisis is not going to be available going forward; this will affect returns on hedge funds and alternative asset classes in the coming three to four years. How should investors prepare for these changes? Dr Ala’a Al-Yousuf: In general, investors need to put high weight on liquidity, and make sure that the institutions and the vehicles they invest in are abundantly capitalised. But they should expect returns to be much lower than what they were in the past. For risk mitigation, they need to look at counterparty credit risk, and a number of operational aspects when selecting investors and investments, bearing in mind that there will be a period of modest growth, globally. There may still be some nasty shocks or surprises coming out of the financial system, with possibly some failures or write-offs. This means that asset classes as a whole will experience volatility, so investors need to guard against this by the usual means of hedging or taking reasonable risks. Volatility will be with us for some time, and financial investors need to develop ways of dealing with it. Has the crisis created any investment opportunities in the alternative assets community? Dr Ala’a Al-Yousuf: Yes, absolutely. Already I see specialist recovery and turnaround funds, bargains in Dubai and other places where there may be distressed investors or sellers trying to cash out; whether it is in the form of secondary market trading in debt, loans that have been offered at deep discounts or real estate opportunities. Which areas would you say are the most promising to gain exposure in? Dr Ala’a Al-Yousuf: I do not have an answer to that. Investors know the opportunities in their own sector – this is a situation of looking specifically at the niches that one knows. It is not possible to generalise and one has to look at things case by case and opportunity by opportunity. Contact:
This unique forum will take place at the Park Hyatt Dubai, Dubai, United Arab Emirates, 29 – 31 March 2010. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The summit includes presentations on market trends and predictions, exploring new investment opportunities and revamping investment strategies. For more information please send an email to info@marcusevanscy.com or visit the event website at www.meai-summit.com Please note that the summit is a closed business event and the number of participants strictly limited.
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings. For more information, please visit www.marcusevans.com All rights reserved. The above content may be republished or reproduced – kindly inform us by sending an email to press@marcusevanscy.com |
||
summits
|
Event Website
|