Investors look to emerging markets for tariff-safe assets

Investors seek assets safe from US tariffs: As US President Donald Trump’s tariff agenda continues to loom large, investors are looking to emerging markets as an option to hedge their investments safely away from developed markets threatened with trade levies, Bloomberg reports. Countries non-reliant on trading with the US — and with strong domestic stories and benchmark indexes — are now seen as a safer investment.

Different economies offer various domestic market strongpoints. China’s recent AI market disruptor DeepSeek, which rattled US tech stock earlier this year, triggered an investment surge in domestic companies using homegrown AI software. Dubai’s foreign worker influx boosted its benchmark index to a record high in February, while Latin American countries like Brazil are stepping in as alternatives to trade originally coming from Mexico.

Stable emerging economies pegged to the greenback are especially attractive as they enjoy the security that comes with a strong USD peg without being exposed to any foreign exchange risk, the business news information service quotes Cheyne Capital’s Carl Tohme as saying. The UAE, Saudi Arabia and Qatar were identified as prime examples. Government backing in many of these markets also provides another layer of security, it said.

This has been going on for a while: January saw “an emerging market buying spree,” with portfolio flows to emerging markets hitting USD 35.4 bn — the majority of which came from debt flows, signaling “investor preference for the relative stability of fixed-income instruments amid persistent geopolitical uncertainty, US monetary policy risks, and global economic headwinds,” according to an Institute of International Finance report cited by Reuters earlier this year.

This comes in stark contrast to European markets which recently took a hit after Trump threatened a 25% levy on EU imports, targeting vehicles specifically, the Financial Times reported. Major auto manufacturing players including Volkswagen and Ferrari saw their stock fall by up to 7.9%.

However, this reorientated focus isn’t completely foolproof — emerging market assets saw a slump at the end of last month, an indication that even those assets are not immune to the impacts of a potential tariff escalation, Bloomberg said.

MARKETS THIS MORNING-

Asian markets are in the green this morning, with Japan’s Nikkei leading gains at 1.09%, and Hong Kong’s Hang Seng trailing closely with a 0.65% rise. South Korean markets are closed for a public holiday. Meanwhile, on Wall Street, futures are up slightly as investors await more clarity on the US’ tariff plans this week.

THE CLOSING BELL-

The ADX fell 0.5% on Friday on turnover of AED 1.8 bn. The index is up 1.6% YTD.

In the green: Alef Education (+3.6%), Hayah Ins. (+3.2%) and Eshraq Investments (+1.9%).

In the red: Gulf Cement (-8.1%), RAK Co. for White Cement and Construction Materials (-6%) and Agthia (-5.4%).

Over on the DFM, the index fell 0.8% on turnover of AED 2.2 bn. The index is up 3.1% YTD.

CORPORATE ACTIONS-

#1- DFM-listed Al Ansari Financial Services is moving to fully take over its Kuwaiti operations arm in a USD 20.6 mn related party transaction, by acquiring the shares held by two of its board members, it said in two disclosures to the exchange (here, pdf and here, pdf). The parent company will tap its own reserves to finance the acquisition, which is expected to boost the group’s revenue by around 2.1%. The final agreement will be signed on Friday, 21 March, after securing shareholder approval, with the ownership transfer due to be completed by Monday, 31 March.

#2- Abu Dhabi Commercial Bank (ADCB) shareholders approved a dividend payout of AED 0.59 per share for FY 2024, totaling AED 4.3 bn, according to an ADX disclosure (pdf).

ALSO- ADCB secured shareholder approval to renew its debt issuance programs and establish new ones worth up to USD 8 bn, and allowing the bank to issue non-convertible securities, sukuk, and other instruments, including under its sustainable finance framework. ADCB also received the green light to issue up to USD 2 bn in standalone debt through conventional bonds, sukuk, and structured or collateralized instruments across listed and unlisted platforms.

The bank has also been authorized to issue up to USD 2 bn in capital instruments, including additional Tier 1 and subordinated Tier 2 securities, to support its capital adequacy.

#3- Sawaeed Holding plans to distribute AED 90 mn in dividends for 2024, according to an ADX disclosure (pdf).

#4- Sukoon Ins. approved dividends worth 20% of its share capital, equivalent to some AED 92.4 mn, according to a DFM disclosure (pdf).

#5- Ajman Bank approved distributing dividends worth 7.25 fils per share for FY 2024, amounting to AED 197.5 mn, according to an ADX disclosure (pdf).

#6- Adnoc’s retail arm Adnoc Distribution’s board will meet today to consider and approve distributing AED 1.3 bn in dividends for 2H 2024 — equivalent to 10.3 fils per share — according to a disclosure (pdf) to the ADX. This would bring the total value of dividends distributed for 2024 to AED 2.6 bn.