The Abu Dhabi Securities Exchange. Regional investors are closely monitoring macro trends and are set to gain as they spot the right opportunities to invest in. Image Credit: Ahmed Kutty/Gulf News

Dubai: As stock markets look to end a tumultuous 2019 on a high note, analysts worldwide foresee a story of stability at home and abroad in 2020 which investors should hope to bank on.

The bygone year was dominated by US-China trade tensions, fears of a hard Brexit and a global slowdown, but indices worldwide are set to close at record highs as concerns around these geopolitical risks eased, setting a positive tone for the year ahead.

The synchronised easing by 23 central banks since mid-2019 too supports a view among economists that global activity will stabilise in the first half of 2020, although signalling that the pace of recovery may be slow at first.

“Global equity markets in 2020 are likely to have a muted first half or even some possible declines as economic growth globally slows somewhat,” said Anita Yadav, Chief Executive at Dubai-based Century Financial.

“However, boosted by easing monetary policy, possibility of fiscal stimulus from governments, possibility of favourable trade resolution between the US and the China, and general cyclical uplift in consumer demand due to low unemployment rates, we expect markets to remain stable or improve in the second half of the coming year.”

Bruce Kasman, Global Head of Economic Research at JP Morgan, too agreed that market growth next year will start at a “subpar” pace, before it picks up by mid-2020. “Political drags will likely fade and business sentiment should firm with a trade deal and more clarity on Brexit.”

Boost for local investors

Analysts said regional investors are closely monitoring macro trends and are set to gain as they spot the right opportunities to invest in.

“In the UAE, we expect equity market to largely remain stable,” Yadav said. “Though lower interest rates and Expo 2020 related activities are likely to provide good boost to the non-oil sector economic growth in the country, pressure on oil prices remain, which in turn will probably see government spending to remain constraint.”

Dubai property broker Appello Real Estate said the coming year will see a flurry of activity in the UAE property market as new developments come to fruition, new regulations begin to have a positive impact, and the country gears up for a huge influx of investors for Expo 2020, starting in October.

Also, the UAE’s fintech sector is poised to enter 2020 with robust deals as more investors and start-ups explore investment opportunities. The UAE is home to one third of fintech start-ups in the Middle East and North Africa (MENA) and the number of fintech companies in the region are expected to reach 1,845 by 2022, a survey indicated, surging from 559 in 2015.

The third quarter of 2019 witnessed continued funding of Mena-based start-ups and the figures are still ahead of 2018, with a slight increase in the number of deals as well, said Philip Bahoshy, the founder and CEO of MAGNiTT, a platform that connects Mena entrepreneurs with investors. He added that there have been several underlying trends that show the maturing stage of the start-up ecosystem.

Long-term returns

An ageing demographic is another crucial area for investors looking to reap good returns in the long run, with the number of 65 year olds and above currently overtaking the number of five year olds for the first time in history.

“As investors, this means that in order to get favourable return on investments, you will need to invest in areas that elderly people have interest in,” said Yadav, when speaking earlier at the ‘Global Investor Outlook 2020’ in Dubai.

“Sports channels, entertainment, health care and things that come with innovation and biotechnology are probably the sectors that will do well in the long-term,” Yadav also urged investors to focus on sector trends that attract and will do well with an ageing population.


UAE investors to pocket a profit

As macroeconomic worries dissipate, 2020 looks attractive for UAE investors as regional deals in property and financial technology, or fintech, is seen ticking higher.

Analysts at EFG Hermes said in a note that they see the UAE as the “most compelling” GCC market for 2020 from a ‘bottom-up perspective’, which is a strategy that first considers macroeconomic factors when making an investment decision.

“The recent rise in oil prices will lead to renewed optimism for Mena region, especially the GCC,” said Eyad Abu Hweij, managing director at Allied Investment Partners PJSC, adding that a sustained rise in prices will boost investor confidence to drive markets higher in 2020.

Oil is set to see one of its best months of the year mainly driven by easing US-China trade relations, as well as consensus among the Organisation of Petroleum Exporting Countries and its allies for further output cuts. Benchmark US and Brent crude prices have increased 35.92 per cent and 26.70 per cent, respectively, so far this year.