By Satish Kanady / The Peninsula
QINVEST, Qatar’s leading investment group, is set to reinforce its presence in Turkey. Amidst a raft of global market challenges, the prominent Qatar-based Islamic financing investment bank, is betting on Emerging Market equities, Europe and other developed markets.
As the general mood across all markets remains uncertain, QINVEST is cautious about the impact of the current macroeconomic environment on its existing portfolio. “Our approach can be summarised as being cautiously optimistic”, Dr Ataf Ahmed (pictured), Head of Asset Management, QINVEST told The Peninsula in an extensive interview.
“QINVEST is seeing huge opportunities in various asset classes in Turkey. In Turkey, for instance, we see Islamic finance outperforming conventional finance and have therefore spent a significant amount of effort and investment making and marketing our products to the local market there.
In 2016, we acquired ERGO Portfoy, one of the largest and fastest growing asset management companies in the country. The acquisition of ERGO Portfoy gave us a unique platform to quickly grow in a market that boasts significant growth and potential. Rebranded QInvestPortfoy, the company is one of the leading asset management groups in Turkey with over 1.0billion Turkish Liras in assets under management, providing pension and mutual fund and discretionary portfolio management services.”, Dr Ataf said.
QInvestPortfoy is expected to play a major role in attracting new investments into Turkey, delivering high value services to a larger client base. It will also benefit from the world-class capability that QInvest currently provides.
QINVEST is also seeing opportunities within Emerging Markets equities, despite the inherent volatility of the asset class, as it thinks that the broad economic backdrop within EM has improved. “Inflation is coming in under control and there are a number of positive surprises in economic growth. Valuations within the EM equity space are attractive, especially when considering valuations relative to developed markets. Therefore, our positive outlook is driven by both an attractive long term economic outlook and favourable valuations”, he said.
“Within Developed Markets, we see the main opportunity in niche markets and in the alternative space. Quantitative Easing out of Europe and the US have driven traditional asset prices to record highs, and we think as we see central banks shrink their balance sheet that we may see heightened volatility and a fall in certain asset prices, especially if we see a slowdown in growth.” Explaining on QINVEST’s exposure to EMs Dr Ataf said: “Our primary exposure to Emerging Markets comes through in-house managed portfolios which focus on this region. These portfolios have exposure to both equities and sukuk. We also have exposure through QInvestPortfoy, which manages Turkish Equities and Sukuk for a number of institutional investors. There is also exposure to broader EM within some of our global funds and mandates, however this is minimal and represents approximately 10 percent of total assets across all funds.”
On the potential impact of liquidity crunch on GCC’s deal making, he said ‘liquidity crunch is something that comes and goes’. Across the region there is now an acceptance that low oil prices are the new normal and businesses have adjusted and are basing their forecasts on “low for long”. “We are seeing GCC nations reinforcing their plans to diversify the economies – moving into sectors like finance, trade and tourism.”
Liquidity crisis will come and go, says QINVEST
As markets tend to offer investors a mixed bag of outcomes, Qatar’s leading investment group QINVEST is bullish on Turkey, Europe and the US. It’s also betting on Emerging Market equities.
QINVEST is cautious about the impact of the current macroeconomic environment. The investment group sees potential headwinds arising from the impact of a delayed FOMC monetary tightening policy and believes the ECB’s removal of Quantitative Easing could expose the Eurozone periphery to a sell-off, reducing liquidity in EM credit markets. It also sees an increase in profit-taking in equities and credit, as the opportunity cost of money-market investments declines post rate hikes.
“There are additional concerns from increasing geopolitical risks both within the region here as well as arising from an increasingly confrontational tone between the US and its allies and North Korea. However, despite the market sentiment, we continue to identify pockets of investment opportunity within key sectors and geographies. Our approach can be summarised as being cautiously optimistic”, Dr Ataf Ahmed, Head of Asset Management, QINVEST told The Peninsula in an extensive interview.
Explaining on QINVEST’s exposure to EMs Dr Ataf said: “Our primary exposure to Emerging Markets comes through in-house managed portfolios which focus on this region. These portfolios have exposure to both equities and sukuk. We also have exposure through QInvestPortfoy, which manages Turkish Equities and Sukuk for a number of institutional investors. There is also exposure to broader EM within some of our global funds and mandates, however this is minimal and represents approximately 10 percent of total assets across all funds.”
On the potential impact of liquidity crunch on GCC’s deal making, he said ‘liquidity crunch is something that comes and goes’.
While the current market environment across the globe is challenging, financial institutions in the GCC region are in a very strong financial position to international players. Liquidity in the GCC has been undoubtedly tightened as a result of the pressures on the oil price, there is also opportunity as we see the rise of growth industries which require innovative finance solutions and institutions look outside of traditional assets and funds for investment.
“We are seeing GCC nations reinforcing their plans to diversify the economies – moving into sectors like finance, trade and tourism. The biggest impact in the region has been the tightening of government spending and introduction of initiatives to compensate for lower oil prices such as the removal of subsidies and introduction of VAT.”