Gulf Business - Predictions 2016: Global Investment House vice chairman and group CEO Maha K Al-Ghunaim
The year 2015 has proven to be an extremely challenging and volatile one for the world, and Gulf Cooperation Council markets in particular. During the first half of the year, markets were fairly positive with MSCI GCC going up by 5 per cent. However, in the second half all these gains were wiped out by concerns arising from sinking oil and commodity prices, geopolitical uncertainties, a slowdown in China, loose monetary policy by the European Union and ambiguity surrounding the United States Fed rate increase. Eventually, the MSCI GCC slumped by 22 per cent in the second half until mid-December and overall stands year to date at -18 per cent.
Despite these extremely volatile and challenging times, we at Global Investment House continue to maintain our profitability momentum; offering the right products and services to meet our clients’ expectations in today’s uncertain environment.
During the year, we inaugurated our office in Dubai International Financial Centre. On the business front, we won several mandates in various lines of business and successfully completed several transactions.
Our managed funds and portfolios also continued to outperform their respective benchmarks and peers. Today, the assets under management on behalf of our clients stand at $4bn in various funds, portfolios and investment programmes.
During 2015, we were assigned to manage a $40m portfolio of non-core assets for a regional bank; we signed an agreement with a Saudi developer to launch a real estate fund in the kingdom; acquired the headquarters of the National Air Traffic Services in the United Kingdom on behalf of our clients; and announced the first quarterly distribution with an annualised return of 10.8 per cent.
Going forward, we expect 2016 to be another extremely challenging year. The world economy is reeling in an environment of declining commodity prices, shrinking capital flows to emerging markets, pressure on currencies, increasing financial market volatility and geopolitical turmoil. Such circumstances have highlighted weakness and the signs of recovery are pretty remote. China’s economic deceleration and shift to a consumer-driven economy are putting the brakes on the world business cycle.
Meanwhile, the eurozone is in a weak recovery mode, due to slow credit growth and a weakening currency.
And lastly, the interest rate rise by the US Federal Reserve on December 16, followed by the same percentage increase in Saudi Arabia, Bahrain and Kuwait, is expected to bring mixed reactions ranging from positive for banks and negative for companies with high leverage.
The GCC region in particular is expected to witness greater challenges arising from the continuous slump in oil prices. Countries are expected to carefully carve out their budget expenses and cut unnecessary spending.
Accordingly, new money raising efforts for asset management businesses, investment-banking deal flows and equity market turnover will be negatively affected during 2016. However, our diversified asset management offering, which covers multi asset classes with different strategies, coupled with our open architecture platform allows us to offer our clients alternative investment solutions such as income-generating real estate products that outperform deposit rates.
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