2018 will be an interesting year for investors; a year for steadfast focus, diversification and continuous considered scrutiny, said a top official, adding that the year begins with a healthy dose of cautious optimism.

Tariq Bin Hendi, executive vice president, head of Products & Advisory and Acting Chief Investment Officer, Emirates NBD Group, was addressing media in the UAE on the bank’s global investment outlook for 2018. The general theme for the year is “Eyes Wide Open.”

 “The 2018 investor must be discerning, focused, agile and adaptable. The year of rallying returns off the back of complacent investing is behind us. That said, provided the right conditions are met, we do expect certain markets to have robust years ahead,” added Bin Hendi.

On last year, it was highlighted how 2017 began with some of the most significant, tangible and transformational disruptions seen in over 50 years.

•    Traditional industries were put in defence mode:

•    Finance had to compete with the onslaught of innovative technology

•    Technology Living is now the new normal.

The rise of nationalism in Europe and the surge of populism in the US saw the greatest disruption to the status quo in decades:

•    Nowhere was this change more palpable in the GCC than in Saudi Arabia,

•    Critically, it was this youth demographic - the millennials globally - which drove overwhelming change in 2017

2017 witnessed EM, particularly India, rise as important and significant global economic contributors:

•    The widely anticipated negative effect of a Trump presidency did not materialize

•    Global debt, however, continues to rise and is now at record levels – more than 325 per cent of global GDP


Highlights of the Emirates NBD 2018 Investment Outlook:

Anita Gupta, head of Equity Strategy continues to remain overweight equities for the first half of 2018 and maintains a focus on the technology sector:

•    India and Saudi Arabia remain our favourite markets from a multi-asset-rally perspective. Both countries are driving changes that will have significant global impact. Indian equities should continue to outperform DM and EM, even with the substantial rally in corporate valuations over the past twelve months. For Saudi Arabia, we would expect positive performance in both bonds and equities alongside the anticipated MSCI upgrade and continued focus on social and economic reform

•    US equities have experienced remarkable returns over the past decade and are now on course for the longest positive streak ever recorded. We did, however, correctly anticipate an increase in volatility as the impact of multiple fed rate increases (albeit from historically record lows) take hold, and the inevitable rise in yields hits as the benefits of tax reform and healthy economic data begin to wane.

For the bond market, Yahya Sultan, head of Fixed Income Strategy feels it is a tale of two halves:

•    We expect DM bonds to deliver negative to flat returns; EM bonds to deliver alpha

•    US Government bonds remain appealing and we believe that they may sustain a range of 2.5 per cent to 2.75 per cent

•    EM debt is appealing and our focus is on the UAE, India, China, Indonesia, Russia, Mexico, Turkey and the KSA.

 Ben Hindi also brought up the topical issues around Blockchain technology and cryptocurrencies which have the investment community divided. Blockchain encompasses the very essence of disruptive technology; while it has certainly changed the way that certain industries do business, as it relates to cryptocurrencies, its potential to displace fiat currencies remains the creed of the crypto believers.

The lack of regulation and resultant inability to “cash-out” on any meaningful scale into fiat currency limits cryptocurrency utilisation to the “pump-and-dump” price arbitraging jaunts in a virtual world. For now, it remains to be seen whether cryptocurrencies can in fact penetrate real economies and in doing so, compel governments and regulators to adapt.

With widespread uncertainty on the strength and stability of markets throughout 2018, holding a position in gold is likely to preserve overall portfolio returns and help mitigate against volatility and potential shocks.

The annual Emirates NBD CIO Outlook is an advisory blueprint covering investment opportunities and key global economic indicators and in-depth financial market insights, based on which Emirates NBD’s team of advisors, traders and analysts make recommendations on financial transactions and investments to the bank’s qualified clients. – TradeArabia News Service