Investors may be feeling the same sense of uncertainty as they did in 2008 as the world prepares to bid farewell to this year and welcome in the next one. Prospects are, going by early indications, that 2015 could be just as troubling and confusing for investors.
This is because stock markets continue to decline while oil prices fluctuate, causing the currencies of the emerging markets to lose a big chunk of their values. And for the major currencies, they continue to swinging up and down.
Meanwhile, the worst form of investment this year has to be in bitcoin, a software-based online payment system and which comes with escalated risks due to the ambiguousness of those who supervise it. This year, Bitcoin lost 64 per cent of its value, drop from $917 to less than $330, easily exceeding the drops recorded by emerging markets’ currencies. The losses were exacerbated after some bitcoin trading accounts and platforms were closed after the US Department of Justice issued an arrest warrant against Robert Faiella, also known as BTCKing, for bitcoin-related scams earlier in the year.
The bitcoin investment deals are all handled behind phantom screens somewhere in the world, and transacted through currencies with no inherent value to back them. Many central banks have warned against the risks of using virtual money and issued bans on bitcoin.
Speculators have been elevated to the role of masters of the markets thanks to their undoubted skills in seizing opportunities and manipulating markets, as well as in their utilisation of conflicting news to perpetuate data that are more often than not fabricated.
Political crisis
Frenetic speculations extended to most commodities, such as oil, gold, stocks, currencies and food staples through unusual movements of capital. Countries will suffer from the consequences set off by the crisis unless they can come up with ways to ease its impact.
Deteriorating conditions, unrest and political crises — the Ukrainian crisis and Iran’s nuclear ambitions, the expansion of the terrorist Da’esh Organisation and its capture of oilfields in Iraq — have helped speculators achieve astronomical profits.
The sharp fluctuations in the stock markets will fuel further uncertainty about investment trends in the next year. Volatility will be apparent in the investment sectors, notably financial services, currencies, oil and gold.
This requires small investors to err on the side of prudence. Stay away from speculations due to their poor quality of the information proffered. They should not get swayed by intense activity on the markets which may look attractive.
As the options of small investors in the region are limited and mainly concentrated in real estate, stocks and trade, the selection of long-term investments with stable returns is vital under current conditions, which will continue to shadow our markets next year.
Nevertheless, there are still opportunities available in the GCC. In the stock markets, for example, the current prices of many listed companies which have a track record of distributing dividends exceeding 5 per cent, are 30 per cent off on their nominal values.
Therefore, maintaining the value of investments and achieving optimum yields is extremely important in the light of the ongoing happenings in the financial markets, instability in global conditions, wars, and acts of terrorism that affect oil production centres in countries such as Iraq, Libya and Nigeria.
