• International report: Saudi Arabia among the top 10 emerging markets in 2018


            Saudi Arabia is on track to join the FTSE and MSCI Emerging Markets indices in 2018 and should be among the top 10 markets on the Emerging Markets list, according to an international report.
    Credit Suisse's report on investment prospects for 2018 said yesterday that the Middle East could capture 7-8 of all emerging market stocks, a feat since it was just a few years ago with zero weight, billions in the form of investment portfolios, where active and passive investors would adjust their exposure.
    With regard to the global economy, its growth is likely to continue at a steady pace even as monetary policy easing has slowed, and global GDP growth accelerated slightly by 3.8 percent, with global inflation reaching an acceptable 2.7 percent.
    The report predicted that corporate capital expenditures, which have been restricted in recent years, will become a major driver of future growth.
    Given this favorable environment, investors can look for strong returns from risk-weighted assets in 2018, albeit in limited terms compared to very good investment performance in 2017.
    According to the report, economic growth is expected to continue at a strong pace in the coming months, supported by both developed and emerging markets, indicating a very low probability of a global recession.
    In the United States, increased corporate capital spending, improved productivity levels, and potential fiscal stimulus are expected to extend the strong business cycle to another year (2018 growth forecast of 2.5 percent).
    As for the euro area, it is likely to see a continuation of the strong performance cycle that has recently begun, preventing an impending political crisis or a sharp rise in the value of the euro.
    The report predicted that emerging economies will remain a pillar of growth in the global economy, with the risk of rising inflation and interest rates as long as their currencies remain stable.
    Turning to China, he stressed that it will continue to play a vital role, as its contribution to the growth of the world economy is expected to increase further because of its growing economic weight.
    As China's leaders continue to focus on stability, the report predicts a somewhat adaptive process with currency stability.
    Michael Strobeek, chief investment officer at Credit Suisse, said: "The increase in corporate capital spending, the improvement in M ​​& A activity and the increase in corporate debt are expected to be significant economic drivers in 2018."
    "We expect the next year to witness relatively good economic growth, which will enable asset classes sensitive to growth changes to continue to perform positively, but there are potential risks to be recognized, whether political, economic, geopolitical or regulatory, .
    Global equity markets have additional growth potential in 2018, as strong economic growth boosts profits and increases confidence, investment experts said, adding that this should encourage further equity flows. The withdrawal of liquidity from central banks is the main challenge, especially in the last months of 2018.
    Emerging market stocks are expected to generate total returns of two small figures in 2018, with good prospects for small capitalization stocks in particular.
    In the developed markets, Japanese and Swiss stocks are expected to provide the best potential. Sectorally, preferences include health care, communications, industries and financial services. Eurozone real estate stocks also offer attractive opportunities for investors as they continue to generate high returns.
    Regarding the fixed income, bond yields in most developed markets were expected to rise moderately, while in the US they would be stable at about 2.7 percent.

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