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
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The specs: 2019 Mercedes-Benz C200 Coupe
Price, base: Dh201,153
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Nine-speed automatic
Power: 204hp @ 5,800rpm
Torque: 300Nm @ 1,600rpm
Fuel economy, combined: 6.7L / 100km
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
RESULTS
Lightweight (female)
Sara El Bakkali bt Anisha Kadka
Bantamweight
Mohammed Adil Al Debi bt Moaz Abdelgawad
Welterweight
Amir Boureslan bt Mahmoud Zanouny
Featherweight
Mohammed Al Katheeri bt Abrorbek Madaminbekov
Super featherweight
Ibrahem Bilal bt Emad Arafa
Middleweight
Ahmed Abdolaziz bt Imad Essassi
Bantamweight (female)
Ilham Bourakkadi bt Milena Martinou
Welterweight
Mohamed Mardi bt Noureddine El Agouti
Middleweight
Nabil Ouach bt Ymad Atrous
Welterweight
Nouredine Samir bt Marlon Ribeiro
Super welterweight
Brad Stanton bt Mohamed El Boukhari
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
DIVINE%20INTERVENTOIN
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
KILLING OF QASSEM SULEIMANI
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Killing of Qassem Suleimani
The specs
Engine: 2.0-litre 4-cylturbo
Transmission: seven-speed DSG automatic
Power: 242bhp
Torque: 370Nm
Price: Dh136,814
Explainer: Tanween Design Programme
Non-profit arts studio Tashkeel launched this annual initiative with the intention of supporting budding designers in the UAE. This year, three talents were chosen from hundreds of applicants to be a part of the sixth creative development programme. These are architect Abdulla Al Mulla, interior designer Lana El Samman and graphic designer Yara Habib.
The trio have been guided by experts from the industry over the course of nine months, as they developed their own products that merge their unique styles with traditional elements of Emirati design. This includes laboratory sessions, experimental and collaborative practice, investigation of new business models and evaluation.
It is led by British contemporary design project specialist Helen Voce and mentor Kevin Badni, and offers participants access to experts from across the world, including the likes of UK designer Gareth Neal and multidisciplinary designer and entrepreneur, Sheikh Salem Al Qassimi.
The final pieces are being revealed in a worldwide limited-edition release on the first day of Downtown Designs at Dubai Design Week 2019. Tashkeel will be at stand E31 at the exhibition.
Lisa Ball-Lechgar, deputy director of Tashkeel, said: “The diversity and calibre of the applicants this year … is reflective of the dynamic change that the UAE art and design industry is witnessing, with young creators resolute in making their bold design ideas a reality.”
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Killing of Qassem Suleimani
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