COVER INTERVIEW
A new north on the investment compass In an exclusive, Masroor Batin, CEO for Middle East and Africa at BNP Paribas Wealth Management, talks about the shift from fixed income assets to equities and the rise of young, sophisticated investors
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hat are your projections for 2020?
2019 began with a bit of a shock because the markets experienced a sharp correction at the end of 2018. However, 2019 eventually proved to be one of the best years on record with positive returns across most major asset classes. For example, the S&P 500 recorded a 31 per cent increase making it one of its best performances ever. 2020 also began with a shock. The global spread of the COVID-19 virus and, relatedly, a steep fall in the price of oil have contributed to significant market volatility as investors seek liquidity in the face of uncertainty. Markets for many asset types have experienced sharp movement as investors have reacted to the possibility of an abrupt slowdown in the global economy, disruption to travel and transport, and an unexpected tightening of credit. It is too early to say with certainty how this issue will play out. But it is clear that the policy response of international governments will play a large role in determining the intensity and duration of the acute stage of the pandemic. There is no easy fix, but a decisive and coordinated response (compared to a delayed and uncoordinated response) will mitigate the spread of the illness and hasten the subsequent economic recovery. Firm action now, exhibiting clear thinking, transparency and strong leadership, will help to accelerate the eventual return of household and business confidence, both of which are critical to long-term economic growth and market stability. Even putting the unpredictable effects of COVID-19 aside, the world is currently in the twilight stage of a long-term economic cycle. Wise investors are therefore those who have built solid levels of defensiveness into their portfolios. The key is diversification. I am absolutely convinced that in 2020, more than any other year, diversification is the cornerstone
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of a successful investment strategy. Even if some asset classes do ultimately outperform others, on a risk-rated basis, pursuing a broad mix of investments at the outset is the most sensible approach given the unprecedented levels of uncertainty and volatility.
What are the implications of regional political developments for the wealth and asset management sector? We have a confident outlook on our regional business. Developments such as the inclusion of local markets (e.g. Saudi Arabia) into significant global indexes have increased liquidity, attracted capital, and put the region on the map. The record-breaking IPO of Saudi Aramco in December 2019 had a similar effect. Many commentators have recently been fixated on various geopolitical issues. This is understandable, but their impact on our business—and indeed, on the regional wealth management sector more broadly—should not be overstated. The latest happenings have not turned investors off the region. Investors are very familiar with the long-term factors at play, and these considerations are already embedded into their decision-making. And perhaps most importantly, longterm wealth creation in the region has not slowed down, meaning that the pipeline of customers seeking global access, expertise and diversification opportunities continues to expand.
From where you’re sitting, what interesting themes do you see in wealth management? Through our own research and conversations with clients, we have identified 10 investment themes for 2020, which we have grouped into four broad ‘opportunities’.
