Perspectives January Publication

Happy New Year and welcome to the 21st edition of Perspectives.

While 2017 was the year of the “Goldilocks economy”, 2018 has turned to be the year of trade conflicts, interest rate concerns and the rise of market volatility. As global equity markets peaked in January and went through a brutal cyclical bear market in the last quarter, the calendar effect is disastrous as 93% of the asset classes ended the year into negative territory. For most investors, 2018 was the worst year since the great financial crisis.

Our flagship fund “Al Mal MENA Equity Fund” ended the year in positive territory (+2.6%) and is up more than 20% over the last two years, more than any other asset class. This demonstrates that an unconstrained strategy focusing on alpha opportunities instead of the direction of the market can generate strong returns even in difficult global market conditions.

This publication is divided in two sections: in the first part, we focus on international markets by reviewing the market action in 2018, the year when (almost) nothing worked. We then share our global investment convictions for 2019.

In the second part, we look at our regional markets. To the surprise of many, Middle East equity was by far the best performing region in 2018. We believe there are still some secular and cyclical reasons to be positive on MENA. We also share our optimism on Dubai; while the local stock market is down -54% since2014 peak, the Emirate remains a success story like no other and is now trading at deep value. We believe it is time to be contrarian as some catalysts should soon be unlocking value.

We hope you will enjoy this issue.

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