The volatilities in the global financial markets and economy seen in 2015 are expected to continue to cause a fair share of worry for countries in 2016, according to the Global Investment Outlook 2016 report released in February by National Bank of Abu Dhabi (NBAD). Entitled Investment Strategies in Today's Volatile Markets, the report analyzes the global investment climate and provides pointers for investors to deal with the economic environment for the rest of 2016. The report mentions oil price fall to be a key complication in the health of the world economy, with oil prices expected to trade in a range of $25-45 during the remainder of the year.
The report notes that while 2015’s economy can be categorized “fragile,” structural problems remain in 2016, and it is worrisome that many policy responses of recent years which helped support global demand were more of “quick fixes” by nature. The study believes that despite economic strains persisting in 2016, there is scope for attractive investment opportunities in selected emerging and frontier markets, especially within the commodities sector.
“The UAE seems to be weathering the storm better than other oil exporting nations,” says the report. “The UAE has over the years taken steps to diversify its economy away from its previous reliance on hydrocarbons.” In the case case of MENA, the report says, “For the past year and a half, MENA equity markets have corrected sharply and valuations are now beginning to look attractive, with some stocks trading on valuations that are looking rather bombed out.” It names UAE as the first GCC nation to respond to the decline in oil prices and devise alternative methods to fund spending such as Value Added Taxes (VAT) and privatizations.
Commenting about the need to ride out this slump, Claude-Henri Chavanon, Head, Global Asset Management, NBAD, says, “Given the investment outlook as described in our report, investors will need to exercise patience and then have the requisite courage to decisively deploy funds when opportunities present themselves.” NBAD’s study also counts the economic impact of Europe’s migration crisis and the uncertainty around impending US Presidential elections as two key risk factors of 2016 that global investors need to keep an eye on.