Over a two-day retreat, Citywire Middle East carried out a poll to measure the pulse of key fund selectors and executives in the asset and wealth management community. We reveal the answers below:
Cautiously optimistic
Based on the survey, the industry is cautiously optimistic about the global outlook, with 39% surveyed stating so, and another 39% polling neutral.
The biggest concern remains geopolitical tensions, cited by 52%, followed by interest rates at 30%. Uncertainty around the Russia- Ukraine and Israel-Palestine conflicts, and rising tensions between the US and China led regional portfolio managers to derisk their risk portfolios last year.
Unsurprisingly, this year, clients are continuing to keep a close eye on the path and timing of interest rate cuts, as well as the US elections and ongoing geopolitical tensions, according to Lucy de Gama, Goldman Sachs’ Mena head of private wealth management, capital markets, apex family office and client strategy.
Following last year’s interest rate hikes, clients are waiting for the Federal Reserve to pivot, having sat on the sidelines in cash or cash instruments such as time deposits. The anticipation of rate cuts has prompted many clients to turn to fixed income to lock in yield.
Among the fixed income sectors, 29% of the respondents at Citywire Middle East’s retreat in Abu Dhabi said investment grade will see an increase in allocation, followed by 26% and 21% expecting emerging markets and high yield, respectively, to see an uptick.
India shing
The majority of the fund selectors and asset and wealth executives at the event expect to see participation in the India and US markets increase.
India’s public markets have been on an eight-year bull run, bolstered by the re-elected Modi administration. Earlier this year, the Indian stock market also overtook Hong Kong to become the fourth largest equity market globally, valued at $4.3tn. The two Indian indicies, the Sensex and the Nifty, are up 9% and 11% this year, respectively.
Due to strong GDP growth and structural growth forecasts, political stability and inflows of funds from foreign investors, the country has emerged as a popular investment destination, particularly with China’s lacklustre markets.
On the alternatives side, private credit remains an attractive opportunity, respondents said, followed by private equity and real estate.
Indeed, investors in the region, similar to the Asia Pacific, have been lapping up private credit opportunities, which have been continuing to deliver double-digit returns.
Globally, private credit propelled the assets of six of the largest alternative asset managers in 2023 to new heights, despite a challenging fundraising market over the year. The largest of the six, Blackstone, ended the year with more than $1tn in assets, with the greatest inflows coming from its credit and insurance division, which attracted $62bn over the year, making up a third of the $150bn total.
Is AI overhyped?
And finally, we asked about the hype of artificial intelligence, which is increasingly working its way into our daily lives, and whether it will meet expectations.
More than half of the attendees at the event, 56%, said the AI boom is not overhyped.
BlackRock and UBS are bullish on AI investments, telling clients the market is not in a bubble, despite concerns about the market’s reliance on a small band of stocks.
Chipmaker Nvidia stands as the biggest AI star, accounting for 32% of the S&P 500’s gains inthe first five months and up 158% since the start of the year.
Meanwhile, the Magnificent Seven – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla – powered more than 60% of the S&P 500’s 26% rise in 2023.
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