Trader profile: Markets to stay calm until Fed’s rate move
Ayman Al Satari discusses the outlook for the markets and reveals his best investments.
April 12, 2015
Updated: April 12, 2015 04:00 AM
Name: Ayman Al Satari
Job: Assistant managing director for International Markets for Menacorp
Years in the investment industry: 20
What is the asset class and geography you are focused on?
I look at most of the global major asset classes. I am focused on understanding correlations between asset classes all over the world, which add a lot of success probabilities to my trading formulas. For the time being we are doing a lot of futures and derivatives, looking at commodities, forex and stock indices.
What is the outlook for the month ahead?
At this point, markets are pretty calm, and I believe this will continue into next month as well. Since February there has been little correlation in this part of the world between major news events such as the Iran deal and the conflict in Yemen, and prices of major asset classes. Everyone is waiting for clearer signals and clues from the US Federal Reserve on when they are going to start raising interest rates. Once there is a clear signal from the Fed, prices will begin to respond again to regional developments. But in the meantime, I do not expect any major news will strongly impact the markets before June.
What are the main risks, either upside or downside, to the outlook?
Right now, one of the main risks is sitting back and waiting for news that will affect the market. No such news is appearing, which is the case as we wait for news from the Fed. Traders are watching for opportunities but there are not really at the moment as the markets seem very consolidated. We hope that this will change in June with a decision from the Fed, but they may decide to wait longer until the end of the third quarter.
What is the best investment at the moment?
The best investments at the moment are European asset classes, ranging from fixed income, including both sovereign and corporate bonds, to equity markets throughout the region, with the exception of Greece. The European Central Bank’s quantitative easing strategy, which began last month, will be in operation for some time, so your long investment is supported by huge buying opportunities from the ECB. To get the best return on investment, you need to keep an eye on the specific assets the ECB is buying on a monthly basis. And of course, if you are investing from outside the euro zone, you need to hedge against the depreciation of the euro, which may affect the returns from your portfolio.
What was the best investment you were ever involved in?
The one that sticks out was trading US equity markets during the second and third rounds of quantitative easing (QE2 and QE3). It was a very clear trend. QE1, launched in November 2008, was very much a testing of the waters, but in QE2 and QE3 the trend had become very obvious, to the extent that the main challenge was not to make money but to beat your last trade. It was similar to what is currently happening now in Europe, but on a far larger scale, and without a lot of awareness from traders and investors. Linked with that, we also had a lot of success with emerging markets over the past two years, as once again QE2 and QE3 made the trend very clear.
What was the worst?
Like many other people I invested in real estate in Dubai and Abu Dhabi in 2007 and 2008, and like many other people it did not go to well for me. Happily however, some of the investments I made at the time have since recovered their value.