Foreign investors have been fearful this year given negative events from the US towards key emerging markets. Several rate hikes in the USA has resulted in a strong dollar, which is typically negative news for most emerging markets. The disconnect among foreign investors has resulted in a half glass type of mentality versus locals being more optimistic and considering the glass to be half full.
MENA markets and Russia have benefitted from the price of oil coming back to $80, which is the strongest seen since the end of 2014. This has hurt the Indian consumer and the economy overall as India is a net importer of oil. Despite the setback from high oil prices, India’s GDP growth is around 8%, a strong foundation for the important national elections coming up in May of next year.
Cheering high oil prices in the Middle East resulted in Qatar being up 11%, Oman up 10% and Kuwait up 9%. These were the top performing markets worldwide in the third quarter. Saudi should have done well given the above but was hurt by negative press and margin calls, while Egyptian shares were on the losing end due to the ongoing high volatility in emerging markets. Despite a weakening outlook for the global economy, the prospects for the energy-rich part of MENA and especially the GCC is improving. Earlier this month the IMF upgraded its growth forecasts for GCC for 2018 and 2019.
Looking ahead, Russia will continue to remain unstable due to the expectation of new sanctions and the geopolitical tensions. The same may be the case for China unless the nasty trade war talks are resolved. India is strong from within and much less reliant on external factors, whilst the MENA region will continue to benefit from high energy prices.
Domicile: Luxembourg Source: Bloomberg