Emirates NBD Chief Investment Officer Gary Dugan reveals Investment Outlook for 2016

3 Min | 03 February 2016

Gary Dugan, Chief Investment Officer - Wealth Management at Emirates NBD addressed media in the UAE on the investment outlook for the year ahead.

Dubai, 03 February, 2016: Gary Dugan, Chief Investment Officer - Wealth Management at Emirates NBD addressed media in the UAE on the investment outlook for the year ahead.

Gary has recently been appointed to lead the CIO office within Emirates NBD Wealth Management, providing valuable guidance to Emirates NBD’s private banking and retail clientele.

Speaking at the media briefing, Gary commented, “Emirates NBD Wealth Management’s 2016 Investment Outlook is an advisory blueprint covering investment opportunities and key indicators across the world economy and financial markets, based on which Emirates NBD’s team of advisors, traders and analysts make recommendations on financial transactions and investments to the bank’s private banking clients.”

Key Highlights of Emirates NBD Wealth Management’s 2016 Investment Outlook:

2016 looks like it will be a very tough year for investors. Policy makers are still actively involved in supporting economies six years after the asset markets started their recovery, yet global growth continues to disappoint. Our advice is to remain defensively invested and wait for true value to appear in the valuation of risk asset markets before committing to any further significant purchases.
The problem for the world is that it is still adjusting to the reality of weaker global growth and extraordinarily high levels of government and corporate debt. Inflation has (worryingly) yet to pick up anywhere close to normal levels. Indeed the world continues to worry about the deflation threat. The recent further fall in the oil price only adds to the disinflationary pressures into the global economy.
2016 will be different to 2015 even if for only one reason, that the Federal Reserve is already on a path of increasing interest rates. Whilst other central banks are still running easy money conditions, higher US interest rates will undoubtedly detract from global growth. The risk is of the dollar becoming significantly overvalued.
If there are positives it is that some asset markets have already moved rapidly to discount problems. Amongst bond markets, emerging market debt and global high yield have had serious price drops, bringing them closer to a level that we believe will offer genuine good long-term value to investors.
It is not if the oil price will ever recover, but when. Many commodity markets are at multi year lows. An oil price below $30 must bring a correction in the supply demand equation.
In a world that lacks growth we still worry about the performance of global equities. We advise investors to invest by sector and stock specifics rather than by country. Our preference is for the technology and healthcare sectors. For those investors who insist on buying into certain countries Japan and the Eurozone remain our preferred regions.
In the emerging markets, India is still a standout. Whilst 2015 was a year of disappointment in respect of reform the country is still slated to achieve medium term economic growth of 7% per annum. It is also one of the few countries that has still the ability to cut interest rates consistently over time.
We expect China to remain a perennial problem for the markets although we don’t believe the very negative views that are expressed by some commentators.
In MENA markets, equities have fallen a long way but remain on valuations that are well above previous distress levels. It doesn’t mean that we necessarily see valuations back to previous floor levels, but that is the kind of value we seek given that the region is facing tremendous challenges from low oil prices, elevated fiscal deficits and weak growth. The good news is that necessary reform programmes have been accelerated which can only be good news for the region over the long term.

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