The new head of asset management at The National Investor says the end of sanctions on Iran could give a boost to UAE markets.
“LIving in the region, as I do, the political risk associated with the Iran story is something we’re used to,” says Sebastien Henin, newly promoted head of asset management at The National Investor, based in Abu Dhabi.
“For us it’s not important. But for fund managers who allocate money across different regions of the world, who sit in Washington, London or New York, it would be a game changer.”
Henin is explaining what would happen if the US and its allies signed a comprehensive deal to lift economic sanctions against Iran. Under the new Iranian president, Hassan Rouhani, elected last June, Iran seems willing to negotiate with the West on issues such as its nuclear programme. An interim deal was signed in November which has led to limited sanctions relief, with the prospect of a more wide-ranging deal in future.
If that happens, says Henin, the economy of the UAE would benefit. The UAE is one of the largest trading partners with Iran and is home to many Iranian businessmen who would expect to profit from easing of trade rules. In addition, many Emirati families have historical links with Iran.
Meanwhile, from the perspective of geopolitical risk, further deals with Iran would soothe the worries of those fund managers based in the US and Europe who have always been perturbed that the UAE lies in a potential danger zone. The threat of conflict with Iran is often mentioned as the biggest geopolitical risk in the Gulf region. If this risk goes away, more money might flood in.
BARNSTORMING
The prospect of improved US-Iran relations is one reason why Henin is optimistic that UAE stock markets can continue to rise this year, despite a barnstorming 2013 in which the Dubai Financial Market rose 110% in value and the Abu Dhabi Securities Exchange followed not far behind.
Another cause of his optimism is the imminent transition of the UAE, along with Qatar, to an emerging market in the classification of index provider MSCI. The transition is scheduled to happen in May and, although many fund managers have already built up positions in the UAE in anticipation of the event – this has partly driven the UAE’s stunning equity growth – there could be more inflows to come. (Another index provider, S&P Dow Jones Indices, also promoted UAE and Qatar to emerging markets.)
Crucially, Henin believes the growth seen in 2013 has not tipped UAE stocks into “overvalued” territory but has restored them to their average level in the past ten years, a forward price-to-earnings ratio of between 12 and 13 times.
“The market is not expensive,” he says. “With all the good news for Dubai, we have good visibility for the coming years for growth. The market deserves a premium which is still not the case.”
The good news for Dubai includes winning the right to host the Expo 2020. As a registered “exposition” city, Dubai gets six months to show off its achievements to the world, something it is never shy to do. Although being an Expo city is hardly the same as hosting the Olympics – many people would struggle to name the most recent Expo city, for instance (it was Shanghai in 2010) – the bid and subsequent triumph was taken very seriously in Dubai. A trip down the main thoroughfare in the city reveals billboard ads from banks and other institutions celebrating the win and giving personal thanks to the ruler, Sheikh Mohammed Al Maktoum. This enthusiasm seems to be infectious, with companies including the National Bank of Abu Dhabi vowing to take on new staff as Dubai prepares for 2020.
STABILITY
Two hours down the road in Abu Dhabi, Henin is not exposed to quite so much of Dubai’s exuberance. However, working in Abu Dhabi, the capital of the UAE, has its advantages. One is a kind of stability in business that is not always found elsewhere in the country. The National Investor exemplifies this stability, he says.
“This year marks the twentieth anniversary of the company and we’ve been in asset management for ten years,” he says.
“We are a local player, not a fly-in company. You have seen in the past, for instance, Pictet launching a fund and closing it. We have seen the same story with UBP, and more recently with ING. In contrast, we have a strong commitment from shareholders to maintain the business.”
The National Investor is not a purely domestic focused player, however. Some of the company’s funds are Ucits products domiciled in Ireland and Henin says more than half of the company’s assets under management are raised from foreign institutions.
The stability of the company is reflected in its personnel. Henin’s predecessor, Walid Hayeck, spent nearly ten years in the role of head of asset management before deciding to move on early this year (he has yet to say where he will work next).
Orhan Osmansoy was chief executive for the same period before he left, at the end of last year, to be replaced by Yasser Geissah, a veteran of financial services in the region, who has worked at the Abu Dhabi Invest Company, National Bank of Abu Dhabi and CAPM Investment, among others.
As well as overseeing the firm’s asset management efforts, Geissah will lead its private equity and investment banking activities. However, Henin says he does not expect the change of leadership to prompt a shift in focus at the company.
Henin himself has been in Abu Dhabi since 2006, where he worked initially for asset manager Invest AD and EIIC, a family office. He came to the Gulf from Morocco, where he had spent ten years, the final four as a fund manager for CFG Group. The experience in this large market prepared him well for the UAE, he says.
“Morocco has a well developed industry. Assets under management are above $29 billion and it’s well regulated. For each asset class you have strict rules. You have a watchdog to check on a daily basis what you are doing.”
SALES PUSH
Is Henin concerned about taking over from Walid Hayeck, who was a familiar and well-liked presence in the region? Henin concedes that Hayeck’s decision to leave was a blow, though he believes his investment team can manage the transition without an effect on performance.
“On the sales side, because he was pretty active, maybe there is a vacuum,” he admits.
“Maybe we will have to be more active in that area.”
However, Henin says there will not be new hires in the sales department because the firm recently expanded and restructured this team.
“Sales used to be an independent department, now one of the gentlemen who used to work there is dedicated to asset management.,” he says.
“We have hired two more people so we now have three people working on the sales side. There is a commitment to sell our products in the coming quarters.”
Sebastien Henin is head of asset management at The National Investor
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