National Bank of Kuwait (NBK), the best bank in the Middle East, held an Investment Forum for its Thahabi clients at Regency Hotel on Tuesday, March 22nd, 2011.
The forum was delivered by George Richani, NBK Group Chief Investment Officer, Husayn Shahrur, Head of MENA Equities, NBK Capital, and Abdulla Al-Najran Al-Tuwaijri, Deputy General Manager, NBK Consumer Banking Group.
Al-Tuwaijri said that this forum comes within the framework of NBK’s commitment to communicate with its Thahabi clients and keep them updated of all the economic and financial developments on the global and regional arenas, and to acquaint them on the latest products and exclusive investment opportunities available.
Al Tuwaijri stressed that "the NBK’s record profits of KD 301.7 million in 2010 is a strong indication of the bank's transparent and unequivocal strategy. Such an outstanding level of excellence and recognition as the best bank in the Middle East would have never been achieved without your trust, loyalty and the confidence you bestowed upon NBK throughout the years".
Al-Tuwaijri noted that "in the beginning of this year, NBK has re-launched the new look of its premium Thahabi account to reflect your standing as distinguished customers". He added that NBK will launch a wide range of new and exclusive products to its Thahabi clients in the coming period.
In his presentation about the international markets’ outlook in 2011, Richani outlined the main themes that prevailed during last year and how the global markets performed overall. He looked at the lessons learned during last year and the main market events in the foreign exchange markets, the interest rate markets, emerging markets and developed markets in the US, Europe, UK and Japan. He also covered the effects of monetary quantitative easing in the developed markets, the European sovereign risk, and the deleveraging processes, default risks of peripheral European countries, currency wars and capital control in emerging markets.
Richani stated that when things were looking a little better natural disaster risks and geopolitical risks surfaced suddenly which added insult to injury to existing increased level of volatility and uncertainty this year. He added that The US economy and financial markets have performed well in the last few months but mostly because of the unprecedented levels of fiscal and monetary stimuli. The main risk in the US could come after the second quarter when the quantitative easing program 2 comes to an end. We need to see whether the US economy will be able to sustain the growth seen thus far without any policy help.
Richani added that the printing of money by central banks in the developed markets especially by the Federal Reserve has caused the US dollar to come under pressure and resulted in rising energy and food prices. It will be a big test for the central banks to see whether they will end the quantitative easing and who will buy Treasury bonds when the Fed stops buying.
“Regardless of whatever environment we end up with as a result of the policy path we take, investors have to learn the many big lessons learned during the past 3 years. One of those lessons is not to believe that this time is different as this is the most dangerous belief that investors should always avoid”, Richani concluded..
On his part, Shahrur raised the question whether investments in the equity markets are viable with recent equity market volatility. In an attempt to uncover whether investing in equities is a viable decision or not, Shahrur looked at historical equity returns from the U.S. and other markets.
Shahrur stated that historically, US equities outperformed US treasury bills significantly, with equities returning a yearly average of 9.97%, as opposed to 3.85% for T bills. He added that Equities is an attractive and profitable asset class over the long-term. Shahrur also analyzed historical market crisis, such as the 70’s crash, the 87 Crash, and the 2000-2001 crash. The data analyzed uncovered that global markets, in general, returned high positive returns in excess of the respective government bills.
Shahrur discussed the attractiveness of the region. He highlighted the low debt levels of our economies, the high energy resources, the large sovereign wealth fund assets, the willingness and ability of governments to support their economies, and the attractive valuations in our equity markets. He also discussed how our markets carry significant risk, such as political risks, non-diversified economies, Global risk correlation, retail dominated market, and weak corporate governance.