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Wed 27 May 2020 04:20 PM

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Middle East investors urged to capitalise on Covid-19 opportunities

David Stubbs, head of market strategy and advice at JP Morgan is advising looking at digital transformation, healthcare innovation and sustainability

Middle East investors urged to capitalise on Covid-19 opportunities

David Stubbs, head of market strategy and advice at JP Morgan Private Bank.

Investors in the Middle East are being urged to concentrate on three key areas – digital transformation, healthcare innovation and sustainability - as well as the old reliable gold, according to David Stubbs, head of market strategy and advice at JP Morgan Private Bank.

That is the advice being given out as countries around the world slowly edge their way out of Covid-19-enforced lockdowns to save beleaguered economies in what has been described as the most severe global crisis since the Second World War.

Stubbs told Arabian Business that interest rates and bond yields are going to be “exceptionally low”, which is going to add up to very high equity valuations once investors steer a clear path to recovery.

In terms of where the smart money should go, he explained: “There’s a huge shift to getting services online, which has been exacerbated by this. Healthcare innovation is another one. Obviously with the focus of the virus, but also because many healthcare systems have been shown to be wanting, many countries are going to build out their intensive care capabilities after this.

“That’s all with the tail wind of the ageing of society and the innovation in drugs and treatment that comes from utilising digital technology in the healthcare sector.”

In terms of sustainability, he added: “It is a virus that’s caused this, but it’s a man-made issue. We are pushing the planet beyond its limits. The fact that we are so crowded in this world, means things like hygiene and natural defences are being eroded and it leads to these kind of issues.

“I think you’ll see a new focus on sustainability and there’s also evidence of sustainable investing in the equities market outperformed before the drawdown.”

Gold eased to a two-week low on Wednesday on optimism about the reopening of the world economy.

Spot gold was down 0.2 percent to $1,707.85 per ounce by 0742 GMT, after hitting its lowest level since May 13 at $1,703 earlier in the session.

However, Stubbs remained confident in its value to investors and “wouldn’t be surprised” if its value were to rise over $1,725.

He said: “We’ve liked gold for quite a while. I think as long as the world is one where interest rates and bond yields are close to zero, or below zero in many parts of the world, I think gold is going to have a role in our portfolios.”

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