Looking at capital market history, the best performing assets often change from one decade to the next, driven by economic and political events.
Therefore, when looking at asset allocation it is vital to regularly reassess the forces in the system that result in structural trends. But do bear in mind that they typically take a few years to emerge.
Here are four capital market trends likely to drive asset class performances this decade.
1. Focus on familiar playing fields
With the increase in geopolitical conflicts in a multipolar world, the investment opportunity set has shrunk. Investors should continue to favour real assets over nominal claims, in jurisdictions where they are comfortable with the political risk.
Macroeconomic and financial market volatility is high, so it is better for investors to focus on capital markets where the playing field is familiar and where the rules of the game are stable and known.
Even though we do not anticipate full-blown deglobalisation with unconditional reshoring, store-of-value equity markets appear likely to profit. “Store-of-value” is an umbrella term for markets in countries where shareholder value and property rights are well protected and there is a strong institutional framework, sound governance and efficient allocation of capital. Examples are the US, Sweden and Switzerland, all of which have an exceptional track record of shareholder value creation.
2. Sanctions bolstering gold and digital assets
Active industrial and fiscal policies, coupled with normalised interest rates, are significantly impacting public finances. This results in increasingly weak government balance sheets.
Meanwhile, geopolitical tensions have prompted western authorities to frequently use the centralised financial system for sanctioning. This benefits “out-of-system” assets, such as gold and Bitcoin, which are characterised by limited supply and insulated from potential western sanctions. This is because in the current context, non-western pools of capital may have moved some money out of that system.
Quite simply, when investors are more concerned about the return of their capital rather than the return on their capital, the premium required to hold out-of-system assets, even if they are unproductive, shrinks. We therefore work with the hypothesis of increased structural demand for out-of-system assets such as precious metals, led by gold, but also digital assets.
3. Dominance of USD capital markets
The rising demand for gold and other out-of-system assets, coupled with skyrocketing US government deficits have left investors wondering whether the current US dollar bull market is due for a reversal. Or indeed, if this marks the beginning of the end of the dollar’s reign as the world’s reserve currency and, potentially, the fiat currency system at large.
While there are merits to diversifying portfolios beyond the traditional USD-based financial system, for the foreseeable future no currency or alternative capital market appears poised to challenge the dominance of USD systems.
As in the past, the current secular US bull market is underpinned by the strength of the American information technology sector, which boasts unrivalled growth and free cash flow generation.
4. Innovation supercycle
The innovation supercycle has important implications for asset allocation. Historically, accelerated innovation has always led to significant shareholder value creation among leading companies. The big question is where this new market leadership will emerge. Looking at the current situation, the answer is likely to be the same as before: within the US IT sector.
The US IT giants had been fundamentally undervalued for more than 10 years. However, this is no longer the case. Today, their free cash flow yield is slightly below that of the S&P 500, and their valuations fairly reflect their growth prospects and free cash flow generation.
As such, investors who have a fundamental growth DNA are in a difficult position right now, as neither China nor Europe, which are burdened by structural issues, offer a viable alternative. In this context, it is too early to underweight the major US technology stocks, especially given their profitability and the strength of their franchises.
The leadership of the US tech sector is most likely to continue, even if its contribution to the outperformance of the US market is likely to be more challenging in the future.
Yves Bonzon is group chief investment officer at Julius Baer
Western Region Asia Cup T20 Qualifier
Sun Feb 23 – Thu Feb 27, Al Amerat, Oman
The two finalists advance to the Asia qualifier in Malaysia in August
Group A
Bahrain, Maldives, Oman, Qatar
Group B
UAE, Iran, Kuwait, Saudi Arabia
UAE group fixtures
Sunday Feb 23, 9.30am, v Iran
Monday Feb 25, 1pm, v Kuwait
Tuesday Feb 26, 9.30am, v Saudi
UAE squad
Ahmed Raza, Rohan Mustafa, Alishan Sharafu, Ansh Tandon, Vriitya Aravind, Junaid Siddique, Waheed Ahmed, Karthik Meiyappan, Basil Hameed, Mohammed Usman, Mohammed Ayaz, Zahoor Khan, Chirag Suri, Sultan Ahmed
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
From exhibitions to the battlefield
In 2016, the Shaded Dome was awarded with the 'De Vernufteling' people's choice award, an annual prize by the Dutch Association of Consulting Engineers and the Royal Netherlands Society of Engineers for the most innovative project by a Dutch engineering firm.
It was assigned by the Dutch Ministry of Defence to modify the Shaded Dome to make it suitable for ballistic protection. Royal HaskoningDHV, one of the companies which designed the dome, is an independent international engineering and project management consultancy, leading the way in sustainable development and innovation.
It is driving positive change through innovation and technology, helping use resources more efficiently.
It aims to minimise the impact on the environment by leading by example in its projects in sustainable development and innovation, to become part of the solution to a more sustainable society now and into the future.
Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
The%20specs
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
COMPANY%20PROFILE
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ILT20%20UAE%20stars
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WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
Company%20profile
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Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
Brief scores:
Everton 2
Walcott 21', Sigurdsson 51'
Tottenham 6
Son 27', 61', Alli 35', Kane 42', 74', Eriksen 48'
Man of the Match: Son Heung-min (Tottenham Hotspur)
