Ahmad Zuaiter, a former money manager for Soros Fund Management LLC, is starting a hedge-fund firm to invest in countries such as Argentina, Nigeria and Vietnam just as emerging markets are selling off.
Zuaiter, who managed money for Soros from 2006 to 2011, said his Dubai-based Jadara Capital Partners LP will focus on stocks related to such “frontier markets” as Pakistan, Morocco, Zimbabwe, Iraq and the United Arab Emirates rather than larger emerging-market countries like China, India and Russia. He plans to start trading by the second quarter of this year.
“This is almost a perfect time to invest in many of these countries because of their accelerating growth and strong fundamentals,” Zuaiter, 45, said by telephone. “Generally speaking, frontier markets are positioned to grow at a much better rate than emerging markets.”
Emerging-market stocks have posted their worst start to a year since 2009 amid a slowing Chinese economy and rising interest rates, falling 4.9 percent, according to the MSCI Emerging Markets Index. Equities related to frontier markets are up 2.7 percent as measured by the MSCI Frontier Markets Index. The index climbed 21 percent in 2013.
Zuaiter said frontier markets should continue to outperform emerging markets this year because their debt is lower measured against gross domestic product, they have younger populations and economies that are “much less dependent on China for their exports.”
Some frontier-market countries, meanwhile, are “introducing capital markets for the first time, with a significant need for growth capital sources,” which is creating opportunities for investors, he said.
Zuaiter declined to say how much money he plans to raise before his hedge fund starts trading. He said he chose Dubai primarily because it is “centrally located” and has good air connections with the countries that Jadara will invest in.
“The Dubai Financial Services Authority is also a big attraction as it gives the gravitas and credibility of a world-class regulator,” he said.
Soros Fund Management, founded by billionaire investor George Soros, returned outsiders’ money in 2011 and converted into a family office to oversee money for Soros and his family.
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