Dark clouds over emerging markets but US sees light



The main point of quantitative easing, the bankers term for a licence to print money, is to encourage investment in risky assets.
It is not, as is commonly believed, simply to stimulate the economy. For the past five years or so of financial crisis everything has been a risky asset really, which is why the programme was considered a general cure-all.
So it is no surprise that the riskiest stocks, bonds and currencies were among the biggest beneficiaries of quantitative easing.
And those very risky assets are, of course, the ones that reside in the emerging markets of the world.
Once the programme caught on, emerging markets investment became something of a self-fulfilling prophecy. With their having received the biggest boost from the early days of quantitative easing, market dynamics took over and a good proportion of the world's available capital poured in to enjoy the bull market QE had created and reap rich rewards.
This headlong rush into the only class of assets that seemed to be generating a good return was indeed a welcome break from all the gloom and doom of sorting out the massive debt overhang that had crippled capital markets in more developed parts of the world.
Indeed, emerging markets were literally the least risky thing you could find while the developed markets world was getting back on its feet.
But the crown has been slipping since the start of the year. As I pointed out a couple of weeks back when the UAE was awarded emerging markets status by the MSCI index-compiling service, stocks, bonds and currencies from across the emerging markets have charted a downwards trajectory since January.
An even greater indication of the loss of faith in emerging markets of late, however, has been the fortunes of the man who came to embody the emerging markets recent bull run.
Eike Batista,the Brazilian billionaire investor and industrialist, predicted last year that he would one day have a net worth of more than US$100 billion.
Such an achievement certainly seemed plausible at the time as Mr Batista, like his native Brazil, was enjoying the fruits of the emerging markets party more than anyone else.
In March 2012, when Mr Batista made the prediction, he was worth about $34.5bn. Mubadala, the Abu Dhabi government linked strategic investment company, invested about $2bn in Mr Batista's EBX Group last year.
The turning point came when one of Mr Batista's offshore oil and gas exploration projects revealed a much smaller find than had been anticipated and that sent investors running for the door.
After that, however, the emerging markets bears took over and sucked the rest of the wind out of Mr Batista's sails.
Now, being down to your last $4bn or so is not exactly penury. But it looks like that $100bn net worth projection might be off the table for a while.
Indeed, Mr Batista is said to be in the process of selling assets, including some of his favourites such as a private jet and some personal property.
With his loss of fortune Mr Batista continues to be the poster child of the emerging markets. Of course, now he is the embodiment of the precipitous decline rather than the equally steep and rapid ascent.
It may look like nothing but dark clouds in the skies over the emerging markets of the world for the foreseeable future, but at least there is a significant silver lining.
The capital rushing out of the new world is rushing back to the old, the United States in particular.
This means that hopefully the US recovery will in the relatively short term gather the same sort of pace as the emerging markets bull run that propelled the likes of Eike Batista into the stratosphere.
And that means that maybe the end of the deepest financial crisis in a generation may finally be coming into view.
 
jdoran@thenational.ae

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
The specs

Engine: 1.5-litre 4-cylinder petrol

Power: 154bhp

Torque: 250Nm

Transmission: 7-speed automatic with 8-speed sports option 

Price: From Dh79,600

On sale: Now

COMPANY PROFILE

Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed 

RESULTS

1.45pm: Maiden Dh75,000 1,200m
Winner: Lady Parma, Richard Mullen (jockey), Satish Seemar (trainer).
2.15pm: Maiden Dh75,000 1,200m
Winner: Tabernas, Connor Beasley, Ahmed bin Harmash.
2.45pm: Handicap Dh95,000 1,200m
Winner: Night Castle, Connor Beasley, Satish Seemar.
3.15pm: Handicap Dh120,000 1,400m
Winner: Mystique Moon, Sam Hitchcott, Doug Watson.
3.45pm: Handicap Dh80,000 1,400m
Winner: Mutawakked, Szczepan Mazur, Musabah Al Muhairi.
4.15pm: Handicap Dh90,000 1,800m
Winner: Tafaakhor, Sandro Paiva, Ali Rashid Al Raihe.
4.45pm: Handicap Dh80,000 1,950m
Winner: Cranesbill, Fabrice Veron, Erwan Charpy.

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Nayanthara: Beyond The Fairy Tale

Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni

Director: Amith Krishnan

Rating: 3.5/5

Company%C2%A0profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ETuhoon%0D%3Cbr%3E%3Cstrong%3EYear%20started%3A%20%3C%2Fstrong%3EJune%202021%0D%3Cbr%3E%3Cstrong%3ECo-founders%3A%20%3C%2Fstrong%3EFares%20Ghandour%2C%20Dr%20Naif%20Almutawa%2C%20Aymane%20Sennoussi%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3ERiyadh%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3Ehealth%20care%0D%3Cbr%3E%3Cstrong%3ESize%3A%20%3C%2Fstrong%3E15%20employees%2C%20%24250%2C000%20in%20revenue%0D%3Cbr%3EI%3Cstrong%3Envestment%20stage%3A%20s%3C%2Fstrong%3Eeed%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EWamda%20Capital%2C%20Nuwa%20Capital%2C%20angel%20investors%3C%2Fp%3E%0A
Company%20profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Fasset%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2019%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Mohammad%20Raafi%20Hossain%2C%20Daniel%20Ahmed%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EFinTech%0D%3Cbr%3E%3Cstrong%3EInitial%20investment%3A%3C%2Fstrong%3E%20%242.45%20million%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%3C%2Fstrong%3E%2086%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Pre-series%20B%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Investcorp%2C%20Liberty%20City%20Ventures%2C%20Fatima%20Gobi%20Ventures%2C%20Primal%20Capital%2C%20Wealthwell%20Ventures%2C%20FHS%20Capital%2C%20VN2%20Capital%2C%20local%20family%20offices%3C%2Fp%3E%0A
A%20QUIET%20PLACE
%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Lupita%20Nyong'o%2C%20Joseph%20Quinn%2C%20Djimon%20Hounsou%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EMichael%20Sarnoski%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
How to watch Ireland v Pakistan in UAE

When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.