Emirates NBD PJSC, the biggest United Arab Emirates bank by assets, said it’s advising clients to buy emerging-market equities and commodities after a bond rally trimmed returns from fixed income.
“We see investment opportunities in equities and commodities across the globe, including the Middle East and North Africa, where we favor high dividend equities over fixed income,” Mark McFarland, chief investment strategist at Emirates NBD Wealth Management, said at a conference in Dubai today.
The Dubai-based lender follows banks including Royal Bank of Scotland Group Plc’s wealth management unit, Coutts & Co., in recommending equity investments this year. Emerging-market stocks will offer returns of as much as 15 percent this year, beating gains from bonds, Gary Dugan, Coutts’ chief investment officer for Asia and the Middle East, said Feb. 6.
Japanese shares, as well as equities across Asia, Latin America and Russia, are attractive as inflows from developed countries grows, McFarland said. European stocks should be avoided due to political risks and U.S. shares don’t offer much value at current prices, he said. Equities on the MSCI Emerging Markets Index trade at 8.7 times expected 2013 earnings, compared with a multiple of 13.7 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.
Emerging-market bonds rallied last year, with the JPMorgan Chase & Co. Emerging Markets Bond Index returning 19 percent, according to data compiled by Bloomberg. The MSCI emerging- market measure gained 15 percent in 2012, having lost 20 percent a year earlier, the data show.
The Russian ruble, the Mexican peso and real estate in the U.A.E. are among other investments Emirates NBD is suggesting to clients, McFarland said.
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