Real estate, alternative real assets and other diversions

Bye bye 2018. Investors will not miss you! Reviewing some of 2018's investments and a look at the year ahead

The Macro View

For investors in the Middle East, global equities and crude oil, it will be hard to wax nostalgic for 2018 given the sheer scale of the losses this year inflicted. Even I was stunned to see Brent crude plunge to $58 just a week after AMEInfo published my column on November’s collapse in black gold! The autumn of 2018 was all about a Halloween risk spasm on Wall Street, not a Santa Claus bull run!

Emerging markets haemorrhaged money in 2018 in an annus horribilis amplified by a spike in the U.S. dollar, monetary tightening and an exodus of offshore money from Arab financial souks from Casablanca to Muscat. Investors unlucky enough to be invested in Turkey, Pakistan, China, South Africa and even the GCC endured losses in the 30% to 60% range. Crude oil, industrial metals, emerging markets currencies and even UK/UAE real estate endured predictable bloodbaths. One of the few profitable investments in 2018 was a three month U.S. dollar bank deposit tied to the sharply rising LIBOR rate. In fact, it is now possible to get a 3% rate on bank deposits in the UAE, not much less than the net (after service fees) of luxury apartments in Downtown and Burj Khalifa. When markets go ballistic, cash is king (and queen too for gender equality purists!). I have not even considered the 70% massacre in crypto-currencies in 2018, the 21st century’s dubious successor to past manias like Dutch tulips, the South Sea bubble, Roaring Twenties New York, Kuwait’s Souk-Al-Manakh, Nikkei index warrants and Pets.com.

Why did it all go so horribly wrong for such a diverse range of asset classes? Simple. 2018 was the year the world central bank liquidity pump sputtered as the Powell Fed raised its borrowing rate thrice and reduced its USD 4.3 trillion balance sheet. Trade tensions between China and Washington soured investor sentiment on global growth. The tragedies in Syria, Libya, Iraq, Yemen, Somalia and the Sahel continued to claim human lives in the game of nations that has given our generation an endless symphony of sorrow. Geopolitical risk cannot be quantified in investment returns or human lives. But it exists. That much, at least, is certain.

The Macro View

About Matein Khalid

Matein Khalid

Matein Khalid is Chief Investment Officer of Asas Capital in the DIFC; he is responsible for global investment strategy and the development of the multi family office platform. He has worked in Wall Street money centre banks, securities firms and hedge funds in New York, London, Chicago and Geneva. In addition, he has been an advisor for royal investment offices in the Gulf for 8 years. Mr Khalid has four degrees in finance, economics, banking and international relations from the Wharton School, University of Pennsylvania. He is a director at the American College of Dubai and has taught MBA level courses in commercial/investment banking at the American University of Sharjah and British University of Dubai. He writes the Global Investing columns for Khaleej Times, Gulf Business and Oman Economic Review.

Articles by Matein Khalid

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