Insights

There’s lot of ambiguity out there. Economists (and the Fed) use the word recession often, but economic activity is not rolling over quite as fast as some had feared. Headline inflation is declining, but core inflation remains persistent. US corporate results are surprising to the upside. Investors, meanwhile, are split into two opposite camps, the worried and the sanguine, with the markets oscillating between the two extreme views.

In meetings with many global investors last week, I was struck by the tangible change in attitude regarding US assets and the US dollar. De-dollarisation has been a part of the investment discourse for some years. However, I have never been so convinced that it has become something that has a meaningful impact on how people invest currently.

Looking back at the history of the circumstances that led to a cut in rates by the Fed, it is evident that an interest rate cut is not on the cards. Of course, a catastrophic fall in the markets or the economy could make the Fed rethink its plans.

The first quarter of 2023 has proven to be one of the most difficult financing environments in decades. With the gulf region being a notable exception, raising equity in private and public markets has become extremely challenging. Many companies that had planned to IPO in 2022 and 2023 have had to defer their IPO plans.

This is the prediction from Dilip N Massand of Legal Ventures, a UAE based fund by Phoenix Advisors that specialises in emerging markets. It is backed by Dalma Capital, a leading alternative investment manager.