Perspectives September Publication

Welcome to the 18th edition of Perspectives.

At first glance, the backdrop for financial markets and the global economy remains healthy. Despite the collapse of the Argentinian Peso and the Turkish Lira, escalating trade war and the upcoming US mid-term election, August was the calmest in 50 years for the S&P 500 but also a historical time for the index as the current US equities bull market officially became the longest ever. In a dedicated section, we first review the key factors behind this record run, the sectors which have been benefiting the most from it, the impacts on valuation metrics and why this rally has been the most hated of all time. We then take exception to the claim that this is the longest bull market in history by showing that this could be a much younger rally than the consensus thinks.

As mentioned in our last edition of Perspectives, the world is bifurcating and the divergence of performance between the US and the rest of the world continued unabated throughout the summer. The key question investors are now facing is whether or not the weakness observed in emerging markets can spillover into developed markets. Our hot topic of the month is covering this issue by looking at the 10 key global risks investors will have to deal with in the coming months. In the Special Focus, we look in details at the crisis in Turkey and what could be the next developments.

This uncertain international context leads us to look at investment solutions for investors willing to be exposed to risk assets while limiting their downside in case of market turbulences. Multi-assets funds seem well positioned to cover their needs and we take a deep dive into one fund in particular.

Moving to the MENA region, our focus this month is on Saudi Arabia. At the end of August, the IMF published an 89 pages report on the Kingdom following their annual consultations with Saudi authorities. In this edition of Perspectives, we highlight some of the key observations and recommendations included in this report. We then share our latest thoughts on the Kingdom and how we play the Saudi equity market in our portfolios.

In line with our expectations at the start of the year, Middle East equities have been performing reasonably well especially when compared to the rest of the emerging markets complex. We remain positive on our regional equities.

We hope you will enjoy this issue.

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