If you have one hundred dollars to spare, where would you invest them? Certainly, this is a bizarre question to ask Davos clientele, but I thought it would help me separate simple ideas from complicated facts. So, with a heart of steel I went roaming with this question, which, surprisingly, provided a million-dollar insight.
The first to answer my question was Marwan Boodai, the man behind Kuwait-based Jazeera Airlines. Mr. Boodai would invest $99.90 in the United States, allocating all other investments a mere 10 cents! This, I have to say, is in line with the general mood of Davos about the slow re-awakening of the American giant, which some say will partly help in shielding the avalanche expected in Europe.
But still, 99 percent fund allocation to the U.S. made me wonder whether the reason was the opportunities in the States, or the lack of them elsewhere. According to Abdul Aziz Al Ghurair, CEO of Mashreq Bank in Dubai, the latter assumption is certainly not true. The man behind one of the biggest banks in the UAE would put his $100 dollars in the GCC equity markets. Having noticed the shock on my face, he explained his rationale behind the strategy. According to Al Ghurair, two to three years back people were happy to pay three to four times the book value of GCC stocks, so right now, when many of these shares are trading below their respective book value, why on earth wouldn’t we scoop them up, knowing that many of the companies behind these stocks have been around for 30 or 40 years.
Now, that makes sense, but if only few men shared this belief with Al Ghurair, the GCC stock markets would not have been suffering as they have. It is the lack of both trust and liquidity that are holding the markets back, he said.
Mazen Darwazeh, chairman of Hikma Pharmaceuticals, has a completely different take on this. “I would borrow another $100 and create a service industry in the Arab world,” he said. Not a surprise coming from then Jordanian businessman who thinks that the demographics of the Arab population have a lot to offer for those who can read between the lines. With the average annual spending on healthcare estimated at $100 per person in the Arab world, a lot still needs to be done if we know that the average American spends $1800 per year, Darwazeh argues.
So we have a call for entrepreneurship, which is a bit enlightening amid all the risks hovering around.
Having been intrigued by the diversity of perspectives, I continued schmoozing in the hallways of the Congress center. My good luck, I met one of the biggest Saudi industrialists, who seemed happy to answer my question. Mohammad Al Madi, CEO of Saudi petrochemical giant Sabic, had a very short answer to the question: Saudi Arabia. Al Madi insists that the kingdom boasts every reason to invest in it, citing a steady economic growth and no foreign debt, which is scaring investors away from the ex-investment Eden that is Europe. With such economic indicators, where else would you go, Madi said.
The answers kept flowing from the Arab participants in Davos, who seemed to have enjoyed the hypothetical situation. Mustafa Abdul -Waddod , managing director at private equity house Abrajj Capital, said he would put his $100 bill in the emerging markets. Yaser El Mallawany, CEO of investment bank EFG Hermes, insists that metals and fixed-income securities like bonds remain part of his investment plan. Of course, none of the answers mentioned Europe. Actually there seems to be a consensus the old continent is really aging, and not that gracefully.
By the end of the day, it seems that the million-dollar perspective I mentioned earlier is simple. Diversification remains the most powerful rule of investment against all the odds that are rocking our world today. There will never be a single viable destination for money, which guarantees that the world will keep spinning. Another major rule is to always invest in what you know, even if that ends up being your humble savings account.