Recession coming, cautions expert
The US slowed down in 2008, and is now poised to move into a recessionary phase. The slowdown has been caused by tighter policies, contracting liquidity and a peak in corporate profits. Expectations of easing growth and sticky inflation have also contributed to the slowdown, said Khuram Chaudhry, chief European quantitative strategist at Merrill Lynch.
Chaudhry was speaking at a special event organised by MONEYworks last month to celebrate the monthly magazine’s 10 years of financial publishing.
He also said that in the months ahead, the direction of interest rates are likely to diverge between the developed and developing world, as the spotlight shifts to Asia and the Middle East.
Chaudhry said that yield curves will remain steep, before flattening as monetary tightening will slow global economic growth and profit expectations.
The 10 year anniversary also had Arjun Murti, managing director of Goldman Sachs investment research, giving his views on oil.
Murti said that the global oil market will rebound by the fourth quarter of 2009, as the world is yet to sort out its supply side.
Murti is well known for his predictions in 2005 for oil to reach US$105 a barrel. Known to some as the Oracle of Oil, Murti, in May 2008, predicted oil price to spike to a range of US$150 to US$200 a barrel over the following 6-24 months.
Addressing dignitaries from across the GCC at the event, Murti said that the secular bull market for crude oil remains firmly in place.
“The core of our thesis remains unchanged: oil prices need to stay at high enough levels for a long enough period of time in order to stimulate a multi-year reduction in oil demand, only after which might a spare cushion and lower price return. Key underpinnings of our thesis remain: (1) limited spare crude oil capacity; (2) lackluster supply growth; and (3) resilient global oil demand growth,” he said.
He, however, added that in the near-term, the outlook is clouded by fears of global recession.
The October English and Arabic editions of MONEYworks will publish detailed interviews with Murti and his views on oil.
The MONEYworks 10 year celebrations were attended by dignitaries from across the industry. Sheikh Sultan bin Saud Al Qassemi, MONEYworks columnist and chairman of Barjeel Securities, and Faisal Belhoul, founder and managing partner of Ithmar Capital, introduced the speakers.
Earlier, Saud Al Amri, chairman of Rasalmal Financial Publishing, MONEYworks’ publishers, said: “It has been an interesting journey for MONEYworks. When the magazine was launched in 1998, it was a different landscape in the GCC financial world. We have seen stock markets launched, property markets prosper, fortunes made, and lost.”
Speaking on behalf of the board of directors, Ken Taylor said: “MONEYworks will continue to enhance its coverage of the region in the years to come. We also intend to publish new titles from the group in the near future.”
The event was sponsored by Barclays Premier Banking, BMW and LG.
