Perspectives July Publication

Welcome to the 17th edition of Perspectives, where we review the second quarter of the year and share our thoughts for the months to come.

The first half of the year is already over! The list of geopolitical risks that have dominated the headlines throughout the second quarter kept expanding and included fears of trade wars, the U.S pulling out of the nuclear weapons agreement with Iran, relations between the U.S and North Korea and credit risk fears in Italy. When it comes to financial markets, the most important feature of the last 3 months has been the performance divergence between the U.S and the rest of the world. While the U.S equity and credit markets have been resilient, risk assets within Europe and Emerging Markets have been correcting. Much of the performance divergence can be attributed to bifurcating growth prospects and the strengthening of the dollar. Despite the rebound of the greenback, commodities have been doing surprisingly well and are now the best performing asset class since the start of the year. In the first part of this edition, we review in detail what we consider to be the “Ten stories to remember” from the first three months of the year.

Looking at the third quarter (and beyond), we remain long-term bullish on the economy and risk assets but expect markets to remain volatile in the near-term. The very good news is that the current context is creating great relative value opportunities and we explore some of them in the quarterly outlook section. The Middle East region is also full of attractive investment ideas. Our flagship Al Mal Mena Equity Fund enjoyed a strong first half of the year with a gain of 10%. Going forward, we believe there are indeed some appealing alpha and beta opportunities to be exploited in our regional markets, a topic we dig further into within the second part of Perspectives.

We hope you will enjoy this issue.

Download PDF