As 2018 starts, investors are preparing for an uncertain year. While the global economy is growing at its fastest pace since 2008, new risks have come to the forefront of investors’ minds, such as growing political and economic challenges, and an increasingly complex global business climate.
The Middle East is no exception, as longstanding regional conflicts, diplomatic crises and an ongoing economic slowdown are creating additional challenges for the region's institutional investors.
To help investors navigate this business environment during this year, we identify four global trends that will impact the region, and outline some tips for investors looking to stay ahead in uncertain times.
In response to strong global growth, many of the world's major banks are starting to pull back on expansionary monetary policies. The US Federal Reserve recently announced a plan to gradually normalise its balance sheet over the coming years (referred to as quantitative tightening or "QT").
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Mercer seeks to double assets under management in the Middle East
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The Bank of England implemented its first rate hike since 2007 in November last year. The European Central Bank has announced a reduction in the rate of asset purchases from this January. The pace and scale of the shift from monetary easing to tightening will be a major influence over economies and markets – both in the region and globally – through 2018 and beyond.
This is likely to have a direct impact on the Middle East, as the region’s central banks have historically followed the actions of the US Federal Reserve, making future interest rate increases a possibility for the region.
The later stages of a credit cycle typically present a challenging environment for investors, offering lower returns and greater risks than the early or mid-cycle periods.
While we anticipate the current economic strength will continue into 2018, investors should start considering the ways in which they might prepare portfolios for the risks and opportunities that the late stage of this credit cycle could present.
As many GCC nations’ currencies are pegged to the US dollar, and many of the regions’ governments and financial institutions mirror the credit policies set by the US, an increase in the cost in borrowing in the region is likely.
Since the financial crisis of 2008, politics has become increasingly polarised, manifesting in the Brexit vote, elections across Europe, the election of Donald Trump and more recently in the Catalan bid for independence. In the region, this political fragmentation has been seen with the GCC-Qatar diplomatic standoff, an increasingly assertive Saudi Arabia, and growing tensions between the GCC and Iran. Investors are likely to face an environment of heightened political uncertainty for some time and should consider stress testing portfolios when reviewing their strategy in 2018.
The financial crisis of 2008 chipped away at trust levels and as such, institutional investors increasingly need to recognize the importance of their role in acting as good stewards of the capital entrusted to them. Investors need to have a transparent set of beliefs in relation to environmental, social and corporate governance (ESG) issues as well as recognising and managing systemic risks such as climate change. It is anticipated that a growing percentage of investors will seek to reflect their values and to promote social good when investing their assets.
This global ESG trend aligns with many government initiatives in the region to promote sustainability, such as the UAE Sustainable Development Goals, Dubai Smart City Initiative, ECO Mena Initiative and many others, which place sustainability at the heart of the region’s modernisation and diversification efforts.
Navigating these four trends will be essential for investors to capture returns in 2018, as an increasingly complex investment climate requires increasingly sophisticated investment solutions.
John Benfield is a partner and the regional head of investments for Mercer Wealth, the world’s largest investment consultancy, with regional offices in Dubai and Riyadh
What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
360Vuz PROFILE
Date started: January 2017
Founder: Khaled Zaatarah
Based: Dubai and Los Angeles
Sector: Technology
Size: 21 employees
Funding: $7 million
Investors: Shorooq Partners, KBW Ventures, Vision Ventures, Hala Ventures, 500Startups, Plug and Play, Magnus Olsson, Samih Toukan, Jonathan Labin
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Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
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Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
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APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
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Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
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Transmission: seven-speed
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UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
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Torque: 580Nm at 1,900-4,800rpm
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Fuel economy, combined: 6.5L/100km
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Pushkin Press
MATCH INFO
Newcastle United 3
Gayle (23'), Perez (59', 63')
Chelsea 0
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia