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Cheyne Capital’s Hedge Fund Bets on UAE as Buffer Against Trump
Cheyne Capital’s hedge fund for Europe, the Middle East and Africa is doubling down on the United Arab Emirates as its favored equity market, saying the nation is best placed to weather turmoil stemming from US President Donald Trump’s policies.
Cheyne Capital’s hedge fund for Europe, the Middle East and Africa is doubling down on the United Arab Emirates as its favored equity market, saying the nation is best placed to weather turmoil stemming from US President Donald Trump’s policies.
A key attraction is the UAE’s currency peg to the dollar, fund manager Carl Tohme said in an interview in Dubai. That helps with preserving and repatriating local equity gains, a certainty lacking in other emerging markets where returns are left exposed to losses from sudden currency swings. While other developing nations also employ pegs, few match the UAE’s financial muscle to maintain them, Tohme said.
The Cheyne EMEA Fund handed investors a 13.1% return last year — double the gain of the MSCI Inc. benchmark for the region — as it benefited from a $73 billion stock-market rally fueled by the UAE’s economic growth and government support for local companies, Tohme said. Toll operator Salik Co., whose shares jumped 74%, and state-backed developer Emaar Properties, up 62%, were among the main drivers.
“In an environment filled with uncertainty, having a currency pegged to the dollar with the debt-to-gross domestic product ratio below 30% offers an exposure that is very appealing from a risk-reward perspective,” Tohme said. “This is an advantage in a highly fluid situation globally, be it on the geopolitical front, on US trade policies or on the direction of US monetary policy.”
A UK-based alternative asset manager that is known for its real estate deals and that counts the Abu Dhabi Investment Authority among its partners, Cheyne has been increasing its overall exposure to the Middle East.
Besides Salik and Emaar, Tohme said he favors shares of Adnoc Gas and Aldar Properties, with both benefiting from population growth in the UAE. “Continuing reforms, growing population, no FX risk, visible earnings for some companies and attractive dividend yields” are the leading arguments for the UAE, he said.
The firm is also looking to increase its exposure to Saudi Arabia, planning investments in companies linked to the government’s Vision 2030 strategy, which spans sectors including entertainment, technology and infrastructure.
The Saudi benchmark Tadawul All-Share Index ended 2024 little changed as its biggest company, Saudi Aramco, lost 15%. Bloomberg reported in July that Saudi Arabia might have to trim billions of dollars from some of its development budgets and put other plans on hold as result of weaker energy prices.
“Short-term negativity is giving an opportunity to enter these secular sectors at better levels,” Tohme said.
The Cheyne fund is also backing Turkey, where it has profited from bank stocks and also on local bonds, where he said the ride was “much smoother” than it was for equities in 2024. Tohme said he expects the country’s return to orthodox monetary policy to continue, and to be successful in reducing inflation.
“Local bonds still look interesting but as rates and inflation come down, we will be favoring equities over bonds,” he said.
©2025 Bloomberg L.P.
This article was generated from an automated news agency feed without modifications to text.
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First Published:14 Feb 2025, 03:51 PM IST
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