ON BE­ING CAU­TIOUS ABOUT THE NEW YEAR

CEO Middle East - - CONTENTS -

THIS YEAR BROUGHT BACK MEM­O­RIES OF Will Fer­rel’s Satur­day Night Live im­per­son­ation of Pres­i­dent Ge­orge W Bush, when he fa­mously (and hi­lar­i­ously) termed ‘the econ­omy’ one among the num­ber of the Axis of Evil. What be­gan as a promis­ing year (ac­cord­ing to some) quickly turned into one that con­tin­ued to leave a sour taste as it limped to­ward the fin­ish line.

It was most ev­i­dent when speak­ing with Mar­riott’s Arne Sorenson about the global econ­omy. In the third quar­ter of the year, Sorenson was gen­er­ally con­fi­dent that US fun­da­men­tal in­di­ca­tors showed strength, and that while the rest of the world looked shakier, that pock­ets of growth in emerg­ing mar­kets were still to be found.

Just a few weeks later, the hos­pi­tal­ity giant found it­self con­tend­ing with the sec­ond largest data breach in his­tory. Mean­while, as 10 year US bond yields crossed lower than those on two-year trea­suries, panic driven in­vestors aban­doned any at­tempt to mimic the con­fi­dence the world’s big­gest hos­pi­tal­ity CEO had ear­lier dared; in De­cem­ber, they plunged the S&P 500 into bear ter­ri­tory, and wiped a whole year’s worth of gains off the Dow Jones In­dus­trial Av­er­age.

When writ­ing this, late in De­cem­ber, US stocks had re­cov­ered to post their largest sin­gle day rally in his­tory. But does that mean the mar­ket was over­sold? Or will stocks in 2019 echo oil’s for­tunes in 2018? Be­cause at one point spec­u­la­tion raged if a steadily climb­ing crude would once again cross $100 for the first time in half a decade. Mere weeks later, it was lan­guish­ing be­low $50, threat­en­ing any rev­enue wind­fall Mid­dle East ex­porters were hop­ing for.

Some emerg­ing mar­kets show signs of prom­ise. 2017’s best, and 2018’s worst per­former, Pakistan could present a fun­da­men­tally stronger case to re­serve more funds for emerg­ing mar­ket in­vest­ments if it can solve its fi­nanc­ing woes. De­ferred pay­ment agree­ments and re­sus­ci­ta­tion ef­forts by Saudi Ara­bia and UAE seem to have stymied its cur­rent ac­count deficit. Un­for­tu­nately, it’s cur­rency, like those in Tur­key, In­dia, and oth­ers has taken a bat­ter­ing, and could con­tinue to do so if the dol­lar grows stronger.

Emerg­ing mar­kets over­all brought pain for in­vestors in 2018. But while Bloomberg an­a­lysts say they’ll bring more heartache in 2019, CNBC begs to dif­fer, say­ing the re­formists they’ve elected could spark a re­vival. What is for cer­tain, how­ever, is that if a bear mar­ket were to rage on for longer, and a re­ces­sion in ei­ther of the two world’s largest economies were to re­sult as of a trade war truce fall­ing through, 2019 won’t bring cheer to any­one.

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