Cheyne Capital’s hedge fund focused on Europe, the Middle East, and Africa is intensifying its investment in the United Arab Emirates, citing the country’s resilience against the disruptions caused by US President Donald Trump’s policies. Fund manager Carl Tohme highlighted the appeal of the UAE’s currency peg to the dollar, which aids in safeguarding and repatriating local equity profits—an assurance that is often absent in other emerging markets vulnerable to abrupt currency fluctuations. While several developing nations utilize currency pegs, few possess the financial strength of the UAE to sustain them, according to Tohme.
The Cheyne EMEA Fund delivered a 13.1% return to investors last year, significantly outperforming the MSCI Inc. benchmark for the region, which saw half that gain. This success was driven by a $73 billion stock-market surge, propelled by the UAE’s economic expansion and government backing for local enterprises. Notable contributors to this growth included toll operator Salik Co., whose shares soared by 74%, and state-owned developer Emaar Properties, which rose by 62%.
“In a landscape rife with uncertainty, a currency pegged to the dollar and a debt-to-GDP ratio below 30% provide an attractive risk-reward profile,” Tohme remarked. “This is particularly advantageous in a globally fluid environment, influenced by geopolitical issues, US trade policies, and shifts in US monetary policy.”
Cheyne, a UK-based alternative asset manager recognized for its real estate investments and partnered with the Abu Dhabi Investment Authority, has been increasing its overall exposure to the Middle East. In addition to Salik and Emaar, Tohme expressed interest in shares of Adnoc Gas and Aldar Properties, both of which are poised to benefit from the UAE’s population growth. He cited “ongoing reforms, a growing population, no foreign exchange risk, predictable earnings for certain companies, and attractive dividend yields” as key reasons for favoring the UAE.
The firm is also looking to enhance its investments in Saudi Arabia, targeting companies aligned with the government’s Vision 2030 initiative, which encompasses various sectors such as entertainment, technology, and infrastructure. The Saudi benchmark Tadawul All-Share Index remained relatively stable in 2024, despite a 15% decline in shares of its largest company, Saudi Aramco. Reports indicated that Saudi Arabia may need to cut billions from its development budgets and delay other projects due to declining energy prices.
“Short-term challenges present an opportunity to invest in these long-term sectors at more favorable levels,” Tohme noted. Additionally, the Cheyne fund is supporting Turkey, where it has seen gains from bank stocks and local bonds, which Tohme described as a “much smoother” experience compared to equities in 2024. He anticipates that Turkey’s return to conventional monetary policy will persist and successfully curb inflation.
