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Thursday, March 23, 2023

Investing unpredictability is now the norm, says report

Investing unpredictability is now the norm, says report

The UAE NBD 2023 Investment Outlook stated that the chaos of the past three years is forming a new investment landscape, uncertainty has become more structured, and unpredictability has become the norm.

Emirates NBD, the leading banking group in the MENAT (Middle East, North Africa and Turkey) region, has published its Global Investment Outlook 2023. Maurice Gravier, Chief Investment Officer of Emirates Airline, revealed the outlook of NBD Group on the theme of “adapting to unpredictability”.

Gravier commented: “The world is transitioning from an era of low inflation, ample liquidity and blissful globalization to a more complex and volatile state. There are short-term unknowns, not least the relative trajectories of inflation and growth and the role of central banks in Reaction function in 2023. There are also longer term effects. We are used to periodic crises and quick solutions from coordinated authorities. We are now entering an era of slow shocks, no easy responses and no global coordination .”

He added: “When unpredictability becomes mainstream, portfolios have to adapt, and that’s where the good news begins. Broad volatility in 2022 has improved long-term expected returns, especially from income-generating assets, and bonds have restructured relative to The power of diversification in stocks. We have realigned our strategic asset allocation for a stronger, better long-term portfolio.”

From a more tactical standpoint, market participants will be watching for a magic moment when central banks move from tightening to pause, opening up for more easing to come. This could happen in a favorable scenario of subdued inflation before economic activity collapses. But it can also happen because of massive economic and financial turmoil. Or it won’t happen at all. Investors’ focus will surely shift from inflation to recession at some point, the report said.

“However, the good news is that market participants are well aware of this double risk and are generally less optimistic. Let’s also reiterate that the West is not the world. among the five largest economies,” it said.

“Earlier this year, we shifted our portfolio to be closer to our new long-term allocation, with a focus on income-generating assets. Money markets and bonds have been less attractive for decades: there’s no need to take too much risk to gain substantial In addition, income is extremely important in times of uncertainty: the opportunity cost of risk-free assets is low, and regular cash flows from coupons and dividends smooth portfolio returns. Ultimately, we look for income in developed looking for capital appreciation in emerging markets with very attractive values.”

“In addition to our long-term strategy, which is our first line of defense against an unpredictable world, we are also poised to be more flexible than ever. Uncertainty breeds volatility, which provides fundamentals for being able to identify and seize opportunities quickly. Investors create opportunity. Our research and investment teams are continuously monitoring top-down factors and bottom-up events to continually adjust your portfolio to a changing world,” added Gravier.

The annual Emirates NBD CIO Outlook is an advisory blueprint covering investment opportunities and key global economic indicators, as well as in-depth financial market insights, on the basis of which Emirates NBD’s team of consultants, strategists and analysts present financial proposals to the bank’s qualified clients. Trading and investment recommendations, the report added. – trade arab news agency

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