Stock markets have made a solid start to 2023 after last year’s meltdown, but the next bull market lies tantalisingly out of reach.
Inflation still remains a major threat, forcing central banks to continue raising interest rates and delaying the long-awaited policy “pivot” by the US Federal Reserve.
The summer is often a slower period for markets but it can also be an opportunity to get in early before prices rally in the final months of the year, as seems to happen more often than not.
If you are looking to invest $10,000 (Dh36,725) over the next quarter, here are three top investment trends to consider right now.
The first gives you exposure to the biggest and, in many cases, best companies in the world, the second is a play on the tech breakthrough everybody’s talking about, while the third takes aim at a beaten-down sector with big comeback potential.
As with any investment, always consider both the risks and rewards and aim to hold for a period of years, not just three months, to give your choices time to deliver on their many promises.
Global large-cap stocks
Wall Street suffered its worst performance since 2008 last year, with the S&P 500 large-cap index crashing 19.4 per cent to end 2022 at 3,839.50.
This year has been better, though, with the index up about 10 per cent so far to 4,198.08 at the time of writing.
Jay Hatfield, chief executive and fund manager at Infrastructure Capital Advisors, is now anticipating a summer rally.
“We remain bullish in the second half of the year and are maintaining our 4,500 target on the S&P.”
Investors are pouring money into “breakthrough technology” such as artificial intelligence (AI), which should support growth, while inflation peaked last year and should continue to retreat.
Recession fears have been overdone, energy prices are falling and threats of a stand-off over the US debt ceiling appear to have receded.
While the US banking crisis remains a concern, Mr Hatfield suggests looking for opportunities in large-cap companies that pay dividends in the second half of 2023.
For most, the best way to invest in US large-cap stocks is via a low-cost exchange-traded fund (ETF), which passively tracks the index.
Popular funds include the Vanguard S&P 500 ETF, SPDR S&P 500 ETF Trust or the iShares Core S&P 500 ETF.
Jason Hollands, managing director of investment platform Bestinvest, says UK large caps also offer good value.
While the S&P 500 is currently valued at 18.78 times forward earnings, London’s FTSE 100 is far cheaper, trading at roughly 10.5 times, Mr Hollands says.
“That is well below the longer-term trend and a discount of more than 30 per cent to global equities, the widest level in decades. UK blue-chips also offer an attractive dividend yield of more than 4 per cent, which is a healthy premium to government bonds,” he adds.
While the UK economy faces plenty of challenges with inflation proving sticky, it is expected to avoid recession this year.
“FTSE 100 companies generate almost 80 per cent of their earnings outside the UK, so should not be thought of as a narrow play on the domestic economy,” Mr Hollands says.
It suits today’s uncertain times, with high exposure to defensive sectors such as consumer staples and health care, he adds.
For most investors, a simple tracker such as the iShares Core FTSE 100 UCITS ETF should suffice here.
Artificial intelligence
Everybody is talking about AI and while some fear it threatens humanity, it offers an exciting investment opportunity in the interim.
US tech company Nvidia is leading the rush to monetise generative AI models such as ChatGPT, says Derren Nathan, head of equity research at Hargreaves Lansdown, and its shares are up a staggering 121.29 per cent so far this year.
Yet, Mr Nathan warns investors to keep a cool head and a close eye on the bottom line.
Nvidia reports first-quarter revenue on Wednesday and is forecast to drop 21.4 per cent to $6.5 billion, with operating profits down 35.6 per cent.
“That leaves a lot of work to meet current full-year estimates of double-digit revenue growth,” he says.
Other companies investing heavily in AI include Taiwan Semiconductor Manufacturing, Meta Platforms, Amazon, Microsoft and Google-owner Alphabet.
Vijay Valecha, chief investment officer at Century Financial, suggests most investors should spread their exposure to AI and highlights the Global X Robotics & Artificial Intelligence ETF.
This invests in an index of companies that seem likely to benefit from increased automation and AI adoption, and has grown a solid, although not spectacular, 14.6 per cent year to date.
However, the ETF is risky as its top-10 holdings make up two thirds of the fund and are expensive, with an average price-to-earnings ratio of about 34.2.
Like any breakthrough technology, the opportunities are huge but so are the risks. Only invest as part of a diversified portfolio.
Mr Valecha says investors could choose to play it safe with Big Tech, such as trillion-dollar companies Apple and Microsoft.
They’ve enjoyed a hugely successful year, rising 39.96 per cent and 32.95 per cent, respectively, year to date.
Recent tech earnings indicate the worst may be behind us, Mr Valecha says.
FTSE 100 companies generate almost 80 per cent of their earnings outside the UK, so should not be thought of as a narrow play on the domestic economy
Jason Hollands,
managing director, Bestinvest
“Investors are better off sticking to the most popular growth names with sound balance sheets and well-diversified global revenue streams, including Google-owner Alphabet, Amazon and Facebook-owner Meta Platforms.”
Asia and emerging markets
At the start of the year, analysts including Lisa Shalett, chief investment officer of wealth management at Morgan Stanley, were tipping “beaten-down” emerging market economies to make a comeback.
China’s post-Covid reopening and pro-growth policies, a peak in dollar strength and new US trading relationships with India, Latin America and smaller Asian countries should lead the long-awaited fightback, Ms Shalett said at the time.
So far, the growth has been slow to come through, with the MSCI Emerging Markets Index up a mere 2.78 per cent by the end of April, but there are good reasons why this should soon change, Mr Hollands says.
“Emerging market equities are cheap today, trading at their steepest discount to developed market equities this century,” he adds.
For years, they were more expensive as investors were willing to pay a higher price for their superior economic growth rates.
“With so much negativity priced in, there is a real opportunity in Asia and emerging markets right now,” Mr Hollands says.
The weaker dollar will ease financial pressure on emerging market countries and corporates that borrowed in the greenback, while inflation is less of a threat in Asia than in the West, he adds.
Vanguard FTSE Emerging Markets ETF, iShares Core MSCI Emerging Markets ETF and Lyxor MSCI Emerging Markets Ex China UCITS ETF are options here.
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Who are the Soroptimists?
The first Soroptimists club was founded in Oakland, California in 1921. The name comes from the Latin word soror which means sister, combined with optima, meaning the best.
The organisation said its name is best interpreted as ‘the best for women’.
Since then the group has grown exponentially around the world and is officially affiliated with the United Nations. The organisation also counts Queen Mathilde of Belgium among its ranks.
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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
Company profile
Name: Infinite8
Based: Dubai
Launch year: 2017
Number of employees: 90
Sector: Online gaming industry
Funding: $1.2m from a UAE angel investor
MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
KILLING OF QASSEM SULEIMANI
Planes grounded by coronavirus
British Airways: Cancels all direct flights to and from mainland China
Hong Kong-based Cathay Pacific: Cutting capacity to/from mainland China by 50 per cent from Jan. 30
Chicago-based United Airlines: Reducing flights to Beijing, Shanghai, and Hong Kong
Ai Seoul: Suspended all flights to China
Finnair: Suspending flights to Nanjing and Beijing Daxing until the end of March
Indonesia's Lion Air: Suspending all flights to China from February
South Korea's Asiana Airlines, Jeju Air and Jin Air: Suspend all flights
The biog
Name: Salvador Toriano Jr
Age: 59
From: Laguna, The Philippines
Favourite dish: Seabass or Fish and Chips
Hobbies: When he’s not in the restaurant, he still likes to cook, along with walking and meeting up with friends.
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Tips for newlyweds to better manage finances
All couples are unique and have to create a financial blueprint that is most suitable for their relationship, says Vijay Valecha, chief investment officer at Century Financial. He offers his top five tips for couples to better manage their finances.
Discuss your assets and debts: When married, it’s important to understand each other’s personal financial situation. It’s necessary to know upfront what each party brings to the table, as debts and assets affect spending habits and joint loan qualifications. Discussing all aspects of their finances as a couple prevents anyone from being blindsided later.
Decide on the financial/saving goals: Spouses should independently list their top goals and share their lists with one another to shape a joint plan. Writing down clear goals will help them determine how much to save each month, how much to put aside for short-term goals, and how they will reach their long-term financial goals.
Set a budget: A budget can keep the couple be mindful of their income and expenses. With a monthly budget, couples will know exactly how much they can spend in a category each month, how much they have to work with and what spending areas need to be evaluated.
Decide who manages what: When it comes to handling finances, it’s a good idea to decide who manages what. For example, one person might take on the day-to-day bills, while the other tackles long-term investments and retirement plans.
Money date nights: Talking about money should be a healthy, ongoing conversation and couples should not wait for something to go wrong. They should set time aside every month to talk about future financial decisions and see the progress they’ve made together towards accomplishing their goals.
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
The Vines - In Miracle Land
Two stars
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
England's all-time record goalscorers:
Wayne Rooney 53
Bobby Charlton 49
Gary Lineker 48
Jimmy Greaves 44
Michael Owen 40
Tom Finney 30
Nat Lofthouse 30
Alan Shearer 30
Viv Woodward 29
Frank Lampard 29
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
UAE currency: the story behind the money in your pockets
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RIVER%20SPIRIT
%3Cp%3E%3Cstrong%3EAuthor%3A%20%3C%2Fstrong%3ELeila%20Aboulela%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Saqi%20Books%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EPages%3A%3C%2Fstrong%3E%20320%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EAvailable%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
Other must-tries
Tomato and walnut salad
A lesson in simple, seasonal eating. Wedges of tomato, chunks of cucumber, thinly sliced red onion, coriander or parsley leaves, and perhaps some fresh dill are drizzled with a crushed walnut and garlic dressing. Do consider yourself warned: if you eat this salad in Georgia during the summer months, the tomatoes will be so ripe and flavourful that every tomato you eat from that day forth will taste lacklustre in comparison.
Badrijani nigvzit
A delicious vegetarian snack or starter. It consists of thinly sliced, fried then cooled aubergine smothered with a thick and creamy walnut sauce and folded or rolled. Take note, even though it seems like you should be able to pick these morsels up with your hands, they’re not as durable as they look. A knife and fork is the way to go.
Pkhali
This healthy little dish (a nice antidote to the khachapuri) is usually made with steamed then chopped cabbage, spinach, beetroot or green beans, combined with walnuts, garlic and herbs to make a vegetable pâté or paste. The mix is then often formed into rounds, chilled in the fridge and topped with pomegranate seeds before being served.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
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Three ways to get a gratitude glow
By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.
- During your morning skincare routine, name five things you are thankful for about yourself.
- As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
- In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
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THE DETAILS
Deadpool 2
Dir: David Leitch
Starring: Ryan Reynolds, Josh Brolin, Justin Dennison, Zazie Beetz
Four stars
What is a calorie?
A food calorie, or kilocalorie, is a measure of nutritional energy generated from what is consumed.
One calorie, is the amount of heat needed to raise the temperature of 1 kilogram of water by 1°C.
A kilocalorie represents a 1,000 true calories of energy.
Energy density figures are often quoted as calories per serving, with one gram of fat in food containing nine calories, and a gram of protein or carbohydrate providing about four.
Alcohol contains about seven calories a gram.
What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
