Ninety One Plc is actively buying stocks from the United Arab Emirates as investors seek alternatives that are less vulnerable to the ongoing trade war initiated by former President Donald Trump. The firm’s emerging-markets equity team, which oversees $11 billion in assets, is particularly favoring the UAE for its “uncorrelated markets” in relation to U.S. tariffs. According to Varun Laijawalla, co-portfolio manager for EM equities, the firm has been increasing its holdings in UAE-listed shares, including notable companies like Emaar Properties PJSC and Abu Dhabi Commercial Bank PJSC.

Laijawalla explained that the UAE is taking a different approach compared to the U.S., by signing agreements with trading partners and welcoming immigrants. He noted, “Is it sort of an escape trade, somewhere to hide? Yes, definitely. It has its own idiosyncratic drivers that will not be necessarily influenced by US policy.” This strategic move is part of a broader trend where investors are looking for stability amidst fluctuating global economic conditions.

The American Beacon Ninety One Emerging Markets Equity Fund, co-managed by Laijawalla and Archie Hart, has shown a robust performance, returning 13% over the past year. This figure places the fund in the top 5% of its peers, as it holds a 3% overweight position in the UAE relative to the MSCI Emerging Markets index. Since November, the firm has been ramping up its exposure to the UAE, coinciding with Trump’s election.

In addition to focusing on the UAE’s property and banking sectors, Ninety One recently included food delivery company Talabat Holdings Plc in its portfolio. Talabat’s $2 billion initial public offering in late 2024 marked it as the largest in the Middle East and the biggest technology listing globally for that year, although its shares have struggled, trading about 10% below their offer price since debuting in December.

While the fund maintains significant investments in stocks from China and India, which account for roughly 40% of its total portfolio, it continues to explore opportunities in emerging markets. Xiaomi Corp was highlighted as a strong contributor to returns in 2024, along with Meituan and Trip.com Group Ltd, both of which are key players in the Chinese market. Laijawalla also noted the recent addition of Turkish defense contractor Aselsan, which has seen its shares rise by 62% this year due to increased demand for defense products.

Ninety One is currently 3% overweight the UAE compared to the MSCI Emerging Markets index, marking it as one of the firm’s larger overweight exposures. The UAE’s growth, driven by immigration and government-backed companies, along with its pegged currency, is attracting global investors at a time when many emerging markets face external uncertainties. Notably, the U.S. recorded a $20 billion trade surplus with the UAE in 2023, one of its largest surpluses with trading partners.

The MSCI Emerging Markets index has gained 4.8% this year, significantly outperforming the S&P 500, which has seen a loss of 4.1%. However, the UAE stocks within Ninety One’s portfolio, such as Emaar, Talabat, and Abu Dhabi Commercial Bank, have lagged behind the emerging markets benchmark.