DOHA: Kuwait Finance and Investment Company (KFIC) clarified in its financial annual report that the International markets closed the year 2016 in bullish territory after enduring a difficult start to the year, with positive economic data coming from Advanced Economies and Emerging Markets. Geopolitical events continued to impact economies on a global standpoint, with the ongoing war in Syria, Yemen, Iraq and numerous terrorist attacks in Turkey creating major security uncertainty around the Middle-East and Europe.
In the United States, the US Federal Reserve was expected to raise interest rates in June 2016, but due to the surprise decision of Brexit, the Fed decided to delay raising interest rates until December 2016, and markets reacted positively towards this news. Donald trump shocked the world as he won the presidential race to the white house, against all expectations, and US equities also rallied due to the fresh fiscal policies which he would introduce such as ease banking regulation, reducing taxes, and spending heavily on rebuilding infrastructure. A trend toward stronger US economic growth and inflation could be accelerated by President-elect Trump’s fiscal plans. Despite the disruption of Brexit, Europe has continued to progress towards a path of slow but steady growth as the ECB has continued to add more stimulus and has continued to boost the quantitative easing measures. Emerging Markets have also performed positively, with the exception of China’s economy which has gone through a rebalancing phase and has slowed down due to the fall in commodity prices (further weakened by oil’s collapse beginning in 2014).
GCC nations have endured a difficult time economically as the slump in oil prices has forced governments to adjust to the new era of lower oil prices. Countries have been encouraged by agencies such as the IMF to accelerate structural reforms to diversify their economies away from Petrochemicals, boost the functional role of the private sector, and create jobs for their swiftly growing labor forces. Another strategy implemented by GCC governments was to issue international bonds to ease the burden on fiscal reserves and improve overall market liquidity. Saudi Arabia made headlines when it issued international bonds at a grand scale believed to be worth USD 17.5b, which was the biggest bond sale from an emerging market nation.
