GCC Markets Suffer Due to Weak Global Environment

By Mohammed Waseem

Investing in the GCC is a good opportunity for foreign investors, be it real estate or the stock market. There are limitations, however and recently the market has been affected quite badly. Property firms and banks in the UAE have been performing badly according to Al Arabiya. However, the risk sentiment has been driving the real estate sector in the UAE.

The underperformance was because of the weak global environment; many leading companies sank and that affected the investors badly. The fall was between 2% and 4% for most companies. Some companies in Saudi Arabia however saw growth even during this downfall. In addition, the central bank chief of Saudi Arabia says that Saudi banks are in a very strong position; they have a capital adequacy ratio of 17.8%, which is way above the minimum specified by Basel standards.

UAE Markets SufferThe central bank of Saudi Arabia is working on maintaining this position and for emphasizing on stability. The country attributed the stability of the market amidst global unrest and turmoil to the balanced monetary policy. The kingdom has also seen an upgraded rating from the rating firm, Fitch Ratings; from an AA- rating, they were upgraded to AA. The kingdom has also been working hard to address other issues including unemployment.

Even though the market is generally weak, Khaleej Times reported that 52% of the UAE residents express confidence in the UAE’s banking system. The conclusion of the survey conducted was that UAE financial institutions are trustworthy enough but they have to do more to convince the rest of the residents to keep their savings onshore. Most of the residents of the UAE are expatriates and they send their earnings back to their countries.

As far as investment in real estate is concerned, UAE court decreed that non-freehold property would be available only for GCC nationals and not all the residents or foreign investors. Freehold property is however available for foreign nationals for investment. In the next article, I will discuss about the freehold property investment in the UAE.

Smart Investments for 2012

By Joyce Morse for HeadlineFinancial.com

With the current state of the economy, it can be hard to know where to invest your money to still make a profit.  It can make you just want to hide it so that it doesn’t disappear.

However, every smart investor knows that you have to take a risk to make money.  The trick is to know which investments carry an acceptable level of risk and which ones aren’t worth it.  Here are two types of investments that you will want to consider adding to your portfolio in 2012.

Technology Stocks

This can seem like a scary investment because you never know where technology is going, but it can also be extremely profitable.  Why should you consider technology for investment?  Because it has strong growth potential.

Stock market chart rising
What stocks are good buys?

Just look at Facebook and how it has exploded and changed the world.  Facebook is more than just a product; it’s a brand.  Today people say “Just Facebook me” as if it is a term and not a website.

So, how do you know which technology to invest in?  This is one area where the risks can be high, but so can the rewards.  Here are a few tips for investing in this growing area.

  • Know the product.  Does it have a solid foundation with a knowledgeable leader?
  • What do others say about the technology?  Get a lot of feedback before you put money into something.  For every technological advancement that has been successful, dozens of others were failures.
  • Is it innovative?  Look for something that’s new and different that could revolutionize the way we do something.
  • Is it an improvement?  Skype, Instaprint, and Cloud storage are all inventive ideas that improve our lives.  While that doesn’t make them a guarantee to be successful, it does improve their possibilities.
  • Talk with an expert.  Before you put money into anything, you should consult with an expert in the field.  An investor is not an expert in technology; an IT person is.  Find out what they think about the new technology and if it is a sound investment.

Why Stocks are Better than Bonds

Many investors will ignore the stock market in favor of the security of bonds in a down economy.  However, the experts say that stocks are still the better way to go.  They expect that bonds in the next 20 or 30 years will only see a return of zero for best case scenario.  More probably is that they will have a negative return.

S&P stocks sold at 13 times the estimated earnings for 2012 at the end of 2011.  Compare this to 1999 when they were selling at 33.5 times.  This shows that there is potential for growth for investors.

You may not want to put as much money into the stock market as in the past, but experts believe that now is a good time to invest in stocks for the long term results.