Dubaibeat reports that Daman Investments, a private sector UAE-based investment management firm, announced today the launch of the Daman Fifth Fund, a $54 million closed-ended fund. Per its press release, the Daman Fifth Fund is “a new mutual fund that will focus on blue-chip equities listed on the GCC financial exchanges, debt products and commodities, and targets an IRR of 25% per year.” Commented Managing Director Shehab Gargash, “[The fund] is an opportunity fund that capitalizes on the upcoming GCC market recovery. Our first closed-ended fund since the launch of the Daman UAE Value Fund back in 2001, which was also a market recovery fund that netted an impressive return of 273.84% over its lifespan.”
The release also highlighted the firm’s 2010 and beyond market outlook, reproduced below:
The GCC markets were serial underperformers in 2009 in terms of both absolute and relative numbers, when compared to EMEA (Europe, Middle East and Africa) and developed markets.
Immediate growth drivers
• The regional GCC markets are currently trading at forward estimated valuation multiples of 10.2x for year end 2010 earnings estimate which are at a discount when we compare to then historic PE average range of 18x for the past 5 years.
• Taking P/B ratios we continue to find further support for the valuation case with the GCC region trading on 1.4x 2010e.
• The FYE2010 dividend yield at regional markets is estimated to be at an average of 3.9% with many individual stocks having yields in excess of double digit figures making the region an attractive play for income related investors.
Catalysts for Long term growth
• The outlook for oil prices remains positive with most investment houses predicting stronger outlook for global growth, lower interest rates and a more realistic acceptance of the limits of energy supply.
• The IMF continues to forecast a benign macro environment for the GCC economies looking for them to increase their GDP some 10 fold from 1980 levels to 2020 equating to some US$2trn in GDP by then.
• The governments of the region continue to pursue stimulatory policies through increased infrastructure spending. This is proving to be a counterbalance to some of the pullback of private sector spending.
• On the Banking sector, we expect the banking sector NPL curve to peak in H1’10 and to start coming down in H2’10 releasing more liquidity into the system as the appetite to grant loans increases with the strengthening economic recovery.
• Petrochemical sector to remain strong for the year on strong global growth rebound trend. GCC players continue to enjoy a strong cost advantage vis-à-vis their global players.
• We continue to view the Real Estate market across Saudi Arabia and Abu Dhabi market as favourable with an improving credit environment and increased deliveries leading to both primary and secondary market demand.
• On the Telecom sector, we are positive with the Industry getting aggressive on price competitiveness and on new product introductions such as VoIP, and upgraded 3G technologies. Strong cash flow and dividend yield characteristics with a lot of the recent deal flow beginning to bear fruit this year provides us the level of comfort to remain bullish on this sector.