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1) What are the biggest risk factors both for MENA markets and global markets in the coming weeks?
Th biggest risk factors in the short term are perhaps the most obvious ones that the markets have long been pricing in: trade talks for global markets, and politics and oil prices for MENA. Otherwise, the good news for the MENA region is that the major economies continue to rebalance and even improve without any obvious signs of stress.
2) Do you expect global growth concerns to keep weighing on investor sentiment throughout 2019? Or is it a temporary problem?
While we do not expect growth concerns to be the single most important item on investors’ agenda, we do expect the dynamics among economic growth, inflation and monetary policy decisions to sporadically weigh on investor sentiment. Accordingly, we expect investors to remain increasingly sensitive to economic data in order to understand the implications, especially on policies adopted by the Federal Reserve in the United States.
3) What is your view for MENA capital markets, and to which markets do you expect to increase / decrease allocations in the near future?
MENA markets are gradually recovering from various economic and political challenges they witnessed over the past couple of years as the political picture has become more clear and the oil price has stabilised. Major index changes also help attract larger pools of money in the case primarily of Saudi Arabia and Kuwait. As we always do, we expect to allocate in stocks rather than markets. Accordingly, we’re looking into opportunities primarily in fast-growing consumer sectors which will benefit from young and growing populations in the region.
4) How do you see the macro picture and M&A evolving in the Gulf?
The macro picture and M&A activity usually go hand-in-hand. From this perspective, it is not a coincidence to see large deals such as Uber’s acquisition of Careem and various banking mergers. As major markets like Saudi Arabia and the United Arab Emirates continue to take steps in opening up their financial markets, issuing longer term visas and diversifying their economies, we expect more M&A activity to take place in the future.
5) Oman’s stock market is one of the worst performers in the region since the start of 2019, what is your view on Oman?
Smaller economies such as Oman and Bahrain have been hurt a little more than others since the oil prices plunge began in 2014. Going forward, we expect their slow recovery path to continue in the absence of major improvements in energy prices.
6) With Tadawul joining the MSCI emerging markets index, what position do you advise investors to take in Saudi Arabia?
If anything, my best advice would be not to follow others’ views when it comes to investment decisions. As willingness and ability to take risk varies greatly from investor to investor, an advisor’s point of view might be completely different to that of an investor, creating a significant mismatch.
7) What’s your view on the current state of the Turkish economy?
Turkey is clearly going through challenging times following a long period of high economic growth. Even though the financial markets seem to have calmed down after last summer’s volatility, there is no easy fix, with significant fiscal and monetary policy challenges ahead. It is thus difficult to say that the economy is out of the woods yet. Politics doesn’t help, either.
(Editing by Gerard Aoun and Michael Fahy)
Any opinions expressed here are the author’s own.
© Opinion 2019