Find anything about our products, search our faqs, and more.
Type your query in the search above and press enter to see the results
Try typing "Card activation"
Choose your language
التغيير الى العربية English
OR
Apply online
Use UAE Pass to submit your application faster.
You must be more than 18 years old and have:
An active UAE mobile number
An Emirates ID
Your passport
Proof of income
A minimum salary of AED 5,000
Chief Investment Officer's team, 05.09.2021
Last week was extremely rich in economic data, with activity indicators- PMI and ISM- in all major regions, as well as the US monthly job report, all for August.
The picture is unambiguous. In the developed world, leading indicators are not progressing anymore. Indices are at historically elevated levels, mostly above 55, but services are softer, and manufacturing activities are suffering from persistent bottlenecks. Meanwhile in China, activity contracted in August: the Caixin composite PMI fell below the 50 mark, at 47.2 after 53.1 in July. The week ended with a massive disappointment in terms of monthly job creations in the US: with 235k additions, it was less than a third of the median forecast.
This was however not a bad week at all for markets. The US S&P500 reached a new all-time high and even stocks in emerging markets had a significant rebound, up 3.4%. All asset classes were actually in the green, which as always means one thing: market participants are confident that the tepid news on the economy, on employment in particular, mean that the extraordinary monetary stimulus will not be brutally withdrawn. We are in a liquidity-driven environment, and there are reasons to believe that the current macro headwinds are transitory, paving the way for robust growth in 2022. Of course, at the current valuation levels, the risk of overconfidence is rising along with stock markets which seem invulnerable. They are not, but for the time being, there is no alternative to generate returns, which is why our positioning remains reasonably pro-risk for now. We closely watch signs of complacency as well as risks to the consensual outlook – which include regulatory and political uncertainty in Germany, Japan and China, as well as, of course, inflation. Stay safe.
Cross-asset Update
Last week saw an impressive number of data points which continue to suggest that the slowdown of the major economies is in full swing, although markets still made new all-time highs and shrugged off the underwhelming news. Investors looked through softening activity and weaker surveys, against the backdrop of pandemic risks which are failing to translate into higher hospitalization rates. Supply constraints and labor shortages should by nature be temporary, although inflationary pressures are lingering longer than initially thought. The labor supply issues and the virus concerns which weighed on the disappointing US jobs report should wane by Q4, the drop in business confidence in Europe is for now a slight pullback from torrid levels, while the severe slowdown in China should soon be addressed by the authorities. Overall, a growth shock is far from being in the cards and global activity is expected to remain resilient into year-end.
The bad news seems to have been priced in already, with market measures of investor sentiment implying business confidence levels not far from the current ones and US long-dated yields actually rising on Friday, rather than falling, when the jobs report was released. Retail investors bought equities at record pace in the summer months, supporting markets, which are unlikely to drop significantly until inflows remain so strong. Also, the degree of investor participation remains very broad, as signified by some market breadth gauges making new all-time highs. The conclusion is that the slowdown in the economy, still showing strong growth in absolute levels, is not at all incompatible with bullish equities.
Long-dated Treasury yields rising on a disappointing US labor report was in our view a high-probability event, as at current levels, the yield on the 10-year note is basically discounting no growth for 2022, when actually the US economy should expand at above-trend rates throughout the year as per consensus estimates. The direction of travel of yields should be higher, as inflationary pressures linger and the tapering of asset purchases is announced. Yet, uncertainty surrounding our 1.75% year-end target is pretty high. The pace of the US recovery remains very uneven, the tone of the Fed’s message could shift more dovish in case of not-so-strong labor markets and investors seem to be looking through the tapering as reassured by Powell that the time of rate lift-off is nowhere near us. Overall, our judgment related to yields having bottomed out and subsequently moving higher is strongly supported by the Treasury-implied level of future growth, unrealistic versus projections.
Negative news on China regulatory interventions seems to be never ending, and it is actually overshadowing the positive fact that China policy is about to turn more expansive, which in turn should stabilize local equity markets. Government bond issuance rose to ¥951bn in August versus a monthly average of ¥387bn through July. Also, additional lending support is coming for SMEs and private enterprises. With global demand softening, it is clear to the central authorities that they can no longer afford that internal demand slips further.
Fixed Income Update
As we dive into the last month of Q3 2021, there are a few nagging questions at the back of the fixed-income investors. The foremost among them is the direction and the magnitude of the movement of the US Treasury yields and, secondly, the effect of the delta variant on the riskier segments of the asset class such as High Yield and EM Debt.
The answer to the first question from our side is that while we remain convinced about the direction of the yields, which is “up,” the magnitude of the move could be lower than earlier anticipated—especially looking at the stagnation of widely followed macro data and expectation of tapering to happen this year being priced in at current levels of the yield. Unless the FED does an unexpected hawkish turn, the yields could be range-bound or increase slightly, rather than a sharp upward movement similar to the first quarter. Our view about the second question is based on the tussle between valuation and fundamentals. The expensive valuation suggests that most of the capital gain from the High Yield sector is behind us. However, the improving fundamentals in plateauing default rates and record levels of cash to debt in the last two decades, along with structurally low beta to equities, means that the stress on this segment is relatively low. We are bullish on EM Debt as most nagging issues, such as the delta variant spread and economic growth concerns, are behind us. Moreover, with the yields expected to be stable, the long duration of this asset class should not hit the investors badly. Valuation wise EM Sovereign debt presents an excellent opportunity for fixed income investors.
Last week was very sedate, with US treasury movements across the yield curve remaining stable. Most of our preferred asset classes, such as China IG, EM Sovereign, and Global High Yield, gave weekly returns between 0.5% and 0.7%. Asia High Yield was the only segment which we like and gave a return of -0.6%. We continue to believe that this is because of repricing of the tail risk where markets expect more defaults from the weaker credits. However, systemic contagion risk remains low given that authorities are keen to avoid domino effects, especially in the property sector. Reinforcing our belief is that we anticipate the government is at the end of its credit tightening phase. There may be some positive intervention to increase liquidity in the system that would benefit the high yield sector. We remain positive on Asia HY, including on China HY, as we believe contagion risks can be managed and systemic worries will not emerge
MENA region has been silent in August with zero issuance from the region. However, the pipeline looks decent in the last quarter of the year. Recent reports by Refinitv suggest that the UAE held credit update meetings with investors last week. There is anticipation that the UAE may issue its first Federal Government bonds. The only Federal level issuance is from the Emirates Development Bank so far. This new issue would be a landmark and should see significant interest from institutional investors. The UAE is considered a solid credit from the region and has received the highest sovereign rating within GCC at Aa2.
Equity Update
After a very upbeat August with both emerging and developed market equities in synch, gaining around 2.5% for the month, last week saw gains of +1.2% for global equities, taking year to date gains to 17%. Many markets up close to 5% including China, Japan and India. India continues to gain as virus cases recede and as an alternate to China. Japan markets have taken well PM Suga’s departure. An encouraging start to September, statistically the worst performing month. There remain plenty of reasons for a pullback with the Jackson hole Central bank symposium where talks of tapering are being microscopically analysed and virus resurgence with vaccine boosters being touted (good news for stocks of companies approved for vaccine boosters). The marked difference between the Covid impact on vaccinated vs unvaccinated remains stark. U.S. equities, the leader in the DM space, headed into the long holiday weekend on a positive note with Fed Chair Powell’s balanced signals supportive and the Nasdaq was up 1.6% and the S&P 500 +0.6%, for the week. Tech back in favour with yields stable and the Nasdaq continues to make new highs as does the S&P 500.
UAE markets added to ytd gains and opening up of the country to vaccinated tourists bodes well for the hotel industry and real estate as more end users like the favourable living and working conditions with digitization and connectivity high on the UAE agenda.
Last week saw the MSCI China gain 4.2% following a flat August, stabilizing after the sharp fall in July. However, China remains the worst performer amongst large markets year to date, with regulatory oversight continuing on gaming hours for children, internet content and possible state investment and oversight on ride hailing companies listed overseas i.e. Didi. Tech giants are committing large contributions to “common prosperity” initiatives. Uncertainty on China policy with its strong push to a more equitable social framework, could continue to take its toll on its capital markets. Valuations are low relatively and absolutely but the impact on profit margins on the large tech companies is yet to be felt. Tencent, Alibaba, Meituan and JD.com are 30% of MSCI China. For positioning we maintain a broader EM overweight and are neutral EM Asia. Domestic China equities preferred over US listed enterprises. China is also strong on ESG initiatives so companies in renewables/ EV space should see continued outperformance. Europe also still looks interesting and a better proxy in some ways with China a major trading partner. The MSCI China has fallen 26% since February 14, while MSCI Europe is up 14% over the same period. Also, the recent Dax Index expansion announcement which includes more tech brings Germany to more contemporary Index weights.
There are several risks for the market: fading monetary and fiscal stimulus, peak earnings/economic growth rates and the Delta variant. However moderate growth upside remains supportive for cyclical assets – higher equities and higher bond yields. Cyclical sectors energy and financials continue to lead global equity returns along with real estate. But the year-to-date rally is broad based with tech and healthcare also with +20% year to date gains. We remain overweight equities with a stronger bias towards developed markets.
Written By:
Maurice Gravier Chief Investment Officer, MauriceG@EmiratesNBD.comEmirates NBD Bank PJSC (“Emirates NBD”) is licensed and regulated by the UAE Central Bank and this website aims at providing Internet users with information concerning Emirates NBD Private Banking, its products and activities. Persons having access to information made available by Emirates NBD on this website accept the following rules:
Reliance:
Emirates NBD uses reasonable efforts to obtain information from sources which it believes to be reliable, however Emirates NBD makes no representation that the information or opinions contained in publications on this website are accurate, reliable or complete. Published information may include data/information from stock exchanges and other sources from around the world and Emirates NBD does not guarantee the sequence, accuracy, completeness, or timeliness of information contained on this website provided thereto by unaffiliated third parties. Anyone proposing to rely on or use the information contained on this website should independently verify and check the accuracy, completeness, reliability and suitability of the information and should obtain independent and specific advice from appropriate professionals or experts. Further, references to any financial instrument or investment product are not intended to imply that an actual trading market exists for such instrument or product. Emirates NBD is not acting in the capacity of a fiduciary or financial advisor. Any publications on this website are provided for informational purposes only and are not intended for trading purposes. Data/information provided herein is intended to serve for illustrative purposes and is not designed to initiate or conclude any transaction. The information available on this website is not intended for use by, or distribution to, any person or entity in any jurisdiction or country where such use or distribution would be contrary to law or regulation. This website and anything contained herein, is provided "as is" and "as available," and that Emirates NBD makes no warranty of any kind, express or implied, as to this website, including, but not limited to, merchantability, non-infringement, title, or fitness for a particular purpose or use.
Modifications:
The provision of certain data/information on this website is subject to the terms and conditions of other agreements to which Emirates NBD is a party. Emirates NBD reserves the right to make changes and additions to the information provided at any time without prior notice. The information may be modified or removed without prior notice. No buy or sell orders submitted via the internet or email will be accepted. In addition, the data/information contained on this website is prepared as of a particular date and time and will not reflect subsequent changes in the market or changes in any other factors relevant to the determination of whether a particular investment activity is advisable.
Liability:
Information contained on this website is believed by Emirates NBD to be accurate and true, in all material respects. Emirates NBD accepts no responsibility whatsoever for any loss or damage caused by any act or omission taken as a result of the information contained on this website. Further Emirates NBD accepts no liability for the information and opinions published on the website and is under no obligation to remove outdated information from its website or to mark it clearly as such. The information given on this website may not be distributed or forwarded in whole or in part. Accordingly, anything to the contrary herein set forth notwithstanding, Emirates NBD, its suppliers, agents, directors, officers, employees, representatives, successors, assigns, affiliates or subsidiaries shall not, directly or indirectly, be liable, in any way, to you or any other person for any: (a) inaccuracies or errors in or omissions from the information available on this website including, but not limited to, quotes and financial data; or (b) loss or damage arising from the use of this publication, including, but not limited to any investment decision occasioned thereby. or (c) under no circumstances, including but not limited to negligence, shall Emirates NBD, its suppliers, agents, directors, officers, employees, representatives, successors, assigns, affiliates or subsidiaries be liable to you for direct, indirect, incidental, consequential, special, punitive, or exemplary damages even if Emirates NBD has been advised specifically of the possibility of such damages, arising from the use of the information on this website, including but not limited to, loss of revenue, opportunity, or anticipated profits or lost business. Emirates NBD expressly accepts no liability for losses or damages of any kind arising from using or accessing this website or links to third-party websites or from viewing information on any of its web pages. Furthermore, Emirates NBD accepts no liability for any unauthorized manipulation of users IT systems. Emirates NBD expressly draws user’s attention to the risk of viruses and the threat of hacker attacks
Third Party Website:
Users may be aware that Emirates NBD has no control whatsoever over third-party websites linked to or from this website and therefore accepts no liability for the content of such websites being correct, complete and legally valid for the products and services offered on such websites. Emirates NBD’s express written permission must always be sought before including a link to this website on a third-party website.
Solicitation:
None of the information on this website in any way constitutes a solicitation, offer, opinion, or recommendation by Emirates NBD to buy or sell any security, or to provide legal, tax, accounting, or investment advice or services regarding the profitability or suitability of any security or investment.
Forward Looking:
The information contained on this website does not purport to contain all matters relevant to any particular investment or financial instrument and all statements as to future matters are not guaranteed to be accurate. Certain matters in this publication on the website are about the future performance of Emirates NBD or members of its group (the Group), including without limitation, future revenues, earnings, strategies, prospects and all other statements that are not purely historical, constitute “forward-looking statements”. Such forward-looking statements are based on current expectations or beliefs, as well as assumptions about future events, made from information currently available. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “seek”, “believe”, “will”, “may”, “should”, “would”, “could” or other words of similar meaning. Undue reliance should not be placed on any such statements in making an investment decision, as forward-looking statements, by their nature, are subject to known and unknown risks and uncertainties that could cause actual results, as well as the Group’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized.
Risk: In addition, before entering into any transaction, the risks should be fully understood and a determination made as to whether a transaction is appropriate given the person’s investment objectives, financial and operational resources, experiences and other relevant circumstances. The obligations relating to a particular transaction (and contractual relationship) including, without limitation, the nature and extent of their exposure to risk should be known as well as any regulatory requirements and restrictions applicable thereto. Data included on this website may rely on models that do not reflect or take into account all potentially significant factors such as market risk, liquidity risk, and credit risk. Emirates NBD may use different models, make valuation adjustments, or use different methodologies when determining prices at which Emirates NBD is willing to trade financial instruments and/or when valuing its own inventory positions for its books and records.
Investment in financial instruments involves risks and returns may vary. Before making such an investment, investors should consult their advisers on the legal, regulatory, tax, business, investment, financial and accounting implications of the investment.
Intellectual property:
The information on this website has been developed, compiled, prepared, revised, selected, and arranged by Emirates NBD and others (including certain other information sources) through the application of methods and standards of judgment developed and applied through the expenditure of substantial time, effort, and money and constitutes valuable intellectual property of Emirates NBD and all present and future rights in and to trade secrets, patents, copyrights, trademarks, service marks, know-how, and other proprietary rights of any type under the laws of any governmental authority, domestic or foreign, shall at all times be and remain the sole and exclusive property of Emirates NBD and/or other lawful parties and you acknowledge that you have no ownership rights in and to any of such items. Except as specifically permitted in writing, the information provided in this website shall not be copied or make any use of any information on this website or any portion of the intellectual property rights connected with this website, or the names of any individual participant in, or contributor to, the content of this website, or any variations or derivatives thereof, for any purpose. Further you shall not use any of the trademarks, trade names, service marks, copyrights, or logos of Emirates NBD or its subsidiaries in any manner which creates the impression that such items belong to or are associated with you or, except as otherwise provided with Emirates NBD’s prior written consent,
Confidentiality:
The information on this website solely for non-commercial use and benefit and the use of this information is not intended for resale or other transfer or disposition to, or use by or for the benefit of, any other person or entity. Information contained in this website shall not be used, transferred, distributed, reproduced, published, displayed, modified, create derivative works from any data contained on this website or disposed of in any manner that could compete with the business interests of Emirates NBD. Any part of this website may not be offered for sale or distribute it over any medium including but not limited to over-the-air television or radio broadcast, a computer network or hyperlink framing on the internet without the prior written consent of Emirates NBD. The information contained on this website may not be used to construct a database of any kind. The data on this website shall not be used in any way to improve the quality of any data sold or contributed by you to any third party.
Recipient Acknowledgements
In accessing this website, you acknowledge and agree that there are risks associated with investment activities. Moreover, you agree that your use of this publication is at your sole risk and acknowledge that the responsibility to obtain and carefully read and understand the content of documents relating to any investment activity described on this website and to seek separate, independent financial advice if required to assess whether a particular investment activity described herein is suitable, lies exclusively with you.
Emirates NBD Bank (P.J.S.C.) is licensed by the Securities & Commodities Authority and subject to regulation, supervision and control of the Authority.
Head Office : Baniyas Road, Deira, PO Box 777, Dubai, UAE
Cyclical assets look through the current economic softness
30.08.2021
New equity records amidst stronger releases
08.08.2021
China clampdown versus Fed persistent dovishness
01.08.2021
The pandemic has lifted many taboos on public deficits and liquidity injections, starting a new era for investments “The Age of Magic Money”.
Know MoreHow was your website experience today?
Subscribe and stay updated!
Get exclusive deals, latest promotions and important information
All this and more in the Emirates NBD newsletter
You are leaving the Emirates NBD Website
You will now be redirected to an external website to view this content. Emirates NBD or any of its subsidiaries does not bear liability/responsibility for any other information published by the website owner or publisher.
You will be redirected in 5 Seconds