GCC funds are holding on to their cash as they prepare for a possible correction in market valuations. This is in stark contrast to a global trend of a reduction in cash holdings in response to a positive sentiment.
Cash levels have continued to stay high, in some cases exceeding 25 per cent, during the past one year, fund managers told Emirates Business. In boom times, cash levels were negligible or even negative. "We are positive on the GCC markets but we have raised our cash levels to around 15 per cent from eight per cent a month ago in our Arab Falcons Fund," said Baldwin Berges, Director at asset management firm Silk Invest.
Globally, portfolio managers have started to increase cash utilisation. Average cash balances have fallen to 3.5 per cent from 4.7 per cent in July, their lowest level since July 2007, according to a fund managers' survey by Bank of America Securities-Merrill Lynch. Only Europe has bucked this trend.
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