Perspectives May Publication

Perspectives explore investment opportunities within international and MENA markets and across asset classes.

Volatility made a (timid) comeback in April and bond yields continued to surprise on the low side. Nevertheless, it was another solid month for international equity markets as the technology-heavy Nasdaq index crossed the 6,000 mark for the first time ever. Meanwhile, global investors’ focus is progressively shifting towards non-US international markets as Europe and selected Emerging Markets have been collecting impressive amounts of foreign flows recently. In the Middle East, markets have been range-bound but the major news was definitely the decree by King Salman of Saudi Arabia to rescind salary cuts and reinstate bonus payments to thousands of civil servants.

While it could beg the question of how committed the Kingdom is in terms of reforms, this news is likely to boost con¬sumer sentiment and is supportive for growth.
Coming back to international markets, investors are now facing the usual question: “Should we sell in May and go away?” This is precisely the focus of our monthly investment strategy (“Seasonality and other stock markets cycle”).
In the “Macro round-up”, we take another look at Global inflation trends and conclude that upside risks are mounting, especially in the U.S. The “Hot topic” of the month is about the French Presidential election, which creates both risks and opportunities for fund managers. We then make the case for Active management, arguing that asset allocators should balance their exposure between passive and active instruments in a smart way.
In the second part of this monthly publication, we share our long-term optimism on Middle East equities.

We hope you will enjoy this Fourth issue.

Please do not hesitate to contact us if you want to discuss further any of these ideas.

Download PDF