Predictions 2017: Global Investment House vice chairperson and group CEO Maha K Al-Ghunaim

Carrying forward from 2015, the year 2016 continued to remain a subdued period for the regional financial services industry. Last year, not only the IPO activity remained muted but trading volumes also remained weaker across GCC stock exchanges. Fiscal woes resulting from a continuous fall in oil prices for the last two years have continued to adversely impact the GCC economies and financial services industry.

The year started with downbeat sentiments as oil prices eased to 12-year low and during the year volatile oil markets kept capital markets on edge. Further, during the year, global cues emanating from major political disruptions including Brexit and the US elections contributed to overall weakness and volatility in the regional markets.

Accordingly, the highlight of the year was a dramatic rise in sovereign borrowings, a significant trend reversal for traditionally cash-rich GCC countries. Towards the end of the year, the markets witnessed an optimism driven by a combination of successful $17.5bn Saudi Arabian sovereign bond issuance and a rally in oil markets driven by OPEC’s decision to cut oil production starting the next year.

Despite these extremely volatile and challenging times, we at Global Investment House continue to maintain our profitability momentum and to create value for our stakeholders through our resilient and robust fee-based business model.

During the year, we won several mandates in various lines of business, successfully completed several transactions and our managed funds and portfolios continued to outperform their respective benchmarks.

We have successfully acquired two real estate properties on behalf of our clients in the United Kingdom offering them competitive and stable income, and are in the process of closing other real estate transactions in Europe and the US. On behalf of private equity funds we manage, we acquired one of the largest quick service restaurant managers in the GCC, Yum Yum Tree restaurants chain, completed several exits and distributed more than $25m to clients raising the total amount distributed since 2009 to more than $380m despite a challenging exit environment for private companies in the region.

Our Special Situations Asset Management solution, launched in 2014, also distributed more than $16m this year, raising the total distributions to more than $265m since 2014 with exits at valuations exceeding targeted prices by 60 per cent.

We expect 2017 to be another extremely challenging year for the regional capital markets and the investment industry. On the global front, we continue to expect acceleration in US output growth helped by higher fiscal spending as the new president assumes office.

Also, expectation of higher interest rates and the relative weakness of other global economies means the strong US dollar era will continue. A rate hike would accelerate the reversal of carry trade, increasing pressure on the emerging market currency and fixed income markets.

Moving to the region, we expect 2017 to be a year of consolidation for financial services sector mirroring the several structural economic reforms targeted to position GCC economies for the long haul.

In 2017, we will continue offering our clients innovative investment solutions with regular distributions and capital gains including real estate products and private equity opportunities in food & beverage, education and healthcare sectors. Furthermore, we will extend our special situations asset management offering to institutions in the United Arab Emirates.