Capex
There is a path to a soft landing, but it is a narrow one. We estimate that there is only a 20% chance that the US will avoid a recession before the end of 2025. We are currently neutral on global equities, but expect to downgrade stocks to underweight during the summer.
Q1 Earnings and sales growth were strong, but the devil is in the details: Without the Magnificent Five, earnings growth for the index would have been negative. On a positive note, margins have stabilized, and earnings growth is expected to broaden into yearend. Companies are optimistic about the economy. Development of AI applications is in full swing, but few companies are monetizing them yet. Consumer spending is strong but is slowing. We reiterate our underweight of consumer sectors, and overweight of Software and Services as the “don’t fight AI” adage holds.
Subdued credit growth and weak global trade will remain headwinds for Emirati stocks. Surging property prices, which have led to a boom in real estate stocks, will also peak soon. Stay neutral on this bourse. Sovereign credit investors, however, should stay overweight UAE in EM credit portfolios.
In this Strategy Outlook we examine why, contrary to popular perception, the odds of a global recession over the next 12 months are rising not falling.
Qatar’s strategy to raise LNG output 84% by 2030 is a bold bet DM demand for energy security – and EM demand for affordable electricity to support economic and population growth – will remain a higher priority than eliminating fossil-fuel consumption over the next 20 years. This will accelerate the development of a global LNG spot market, which will increase demand for LNG tankers.
