The Factors Influencing Global Markets

[Music] okay ladies and gentlemen thank you so much again for sticking around for this next conversation Dan Murphy with you from CNBC and I am thrilled to be joined by this panel of experts to discuss all things Global markets in 2025 so Robert Solomon is here he Dean Stern at New York University in Abu Dhabi sir thank you so much for being here thank you CLA Woodman is head of air and CEO at Morgan Stanley hanik kbli is the chairman International at BM and shamshi Bali is founder and chairman of bile Holdings and of course all have exposure to the global markets with unique perspectives and insights so let's dive straight into the conversation and in particular the factors influencing Global markets so CLA first to you when you think about the outlook for 2025 what type of Global Market environment do you anticipate for the year ahead and how is it going to impact Morgan Stanley uh thank you and um I'm really pleased and thank you for inviting me to be here I think before we start um just to focus on global let's talk about what we see here so Morgan Stanley has been doing business in the GCC for 50 years we opened our office here in Abu Dhabi earlier this year at the start of the year um it has to have been the easiest process that I have experienced in terms of going into a new market so our clients are really excited and to and really to underscore it being the capital of capital because we have really seen this transition from um the GCC and UAE as being an exporter of capital to seeing the two way of capital flows and I think that's something that's really been underscored in the uh the paper um when we zone out and look at um the global Outlook we're actually optimistic about what 2025 holds not just for the region and the Region's role globally but globally we think that the environment is very conducive for for transactions and deal makings and for our clients to be able to get their strategic Ambitions and their business plans executed and I think post election we're also seeing that being reflected in the equity markets at least in the United States right now it's D 45,000 S&P 500 and NASDAQ tracking it fresh record highs this week as well and macroeconomic ially the Outlook also looks particularly constructive for Abu Dhabi for the UAE for the Gulf region and also Global markets in particular the United States so there's a lot to be optimistic about but honey wanted to come over to you what's your view on 2025 am I being too optimistic myself when I talk about not just what's happening in the capital markets is that necessarily a reflection of the business environment or the economy broadly I think you mentioned um us and the region and and these are two places to be optimistic about um I'd pull out a couple of things just so that we um temper the optimism with a little bit of kind of risk um Management in sight we do look at we think by the way our analysts are calling a you know another 5% rise in S&P 500 next year and potentially another 5% in bonds as well which makes bonds potentially a little bit more attractive um save for the risk of Stack flation we are watching debt levels and F balances uh in developed economies broadly um we're also um watching um political potential domestic political disruption in developed democracies especially who would have thought that uh Korea um France uh Germany would be where they are from a kind of domestic political um situation today so yeah I think the optimism in the US uh for all sorts of reasons I I think there's a lot of investment going in the US I I do think that um since the um rise in US yields in 2022 a lot of money was sucked out of emerging and growth markets back into the US that has not reversed yet um uh and uh and I think that probably likely continues in a trump Le Administration so us investments in the US and then I think this region any region that has the the types of surpluses that this region has and the focus that we're seeing here today uh and have been seeing for a few years now on uh bringing Investments back into the region these are very positive um developmental opportunities absolutely and shamire you're running a business that's exposed to the emerging and developing markets we've framed a lot of the conversation around what's happening in the United States what's happening in DM what are you seeing in EM right now so we've always been a Emerging Market SP we very active in uh uh GCC and Africa we have our presence in India as well and whichever we way we go we will need more health care for sure because with the Advent of AI and uh with less resources and more people getting very educated about their health post covid we find that the need is more so we are very excited about the prospects we are excited about uh Abu dhabi's position in the global uh market in terms of becoming the Gateway because we say we are catering to a 10 million population but we are in fact catering to a a 10 billion population with all the trade agreements that are signed between UA and multiple countries which allows us the access to provide Healthcare so we are very bullish on 2025 especially with the kind of Global Market positions we have got with the help of Abu Dhabi leading the way we always see that is the Tailwind that is created so we are very excited about 2025 and Beyond I like it so the bull case staying intact on this table here um one of the other things I wanted to talk about is of course you know we're here in Abu Davi there are deep pools of of public and private Capital moving around this Emirate this country and this region Dean when you think about this more broadly what do the Emerging Markets need to do to attract and draw in more stable flows of foreign Capital this is important as well yeah and I think one of the things that uh Abu Dhabi has done well in the UAE in particular is it has the formula when I think about sort of cyclical effects versus structural effects when I think about the structure of the UAE and Abu Dhabi all the all if we think of it as a recipe all of the ingredients are there right you have uh stable political environment you have institutions that function institutions that work you have opportunity a tremendous amount of opportunity the demographic Graphics are really favorable to Abu Dhabi uh this is one of the reasons that we are here the stern School of Business is here in Abu Dhabi because we see the Promise and one of the things that we hear uh when we are out speaking with constituents is that one of the greatest areas of need is building up of human capital and talent educating Talent uh and that's what we're doing here to help develop the Business Leaders the next set of managers for the future so when I think about Emerging Markets I think and growth markets in particular I think places like Abu Dhabi are in a really really um favorable position because again like I said all the ingredients are there when I think about some of the other emerging economies I think about cyclical effects and while I agree that uh the the the broader Global macro environment looks positive I do see some risks I see risks for example from tariffs and a potential trade War uh if such things arise I see the potential for inflation say in the United States what happens if these things come to pass in the United States you can observe say a strengthening dollar what happens with a strengthening dollar well for emerging growth markets what you have is those company those countries that rely on um that rely on Commodities that are traded in dollars will feel the pinch uh those countries that have dollar denominated debts will feel the pinch uh cyclically you might have some Investments that are drawn back to the United States that don't flow to growth and emerging economies but places like Abu Dhabi again that are structurally very sound I think will continue to be an attractive place for foreign businesses to invest CL can I get you to respond to that as well of any of the risks that have just been highlighted is there anything that also gives you pause um for for this for this particular region and UAE I I actually think that the combination of um partners ships between um local businesses and pools of capital here with International businesses and this real um um prioritization of knowledge transfer technology and Innovation I think actually it's set up to be really um um well um aligned and I do think that there is a um a Prudence about the approach from policy makers here and from the government so there isn't just a you know growth at cost and and without regard for the risk so the opportunity set is there but there is a real understanding and a forward-looking proactive approach to management of risk so no so I um I had the chance to read the U Capital Flows In A polycentric World paper uh on on the way over here it calls out three things that are um positive variables that support the flow of capital into a region and I think um Abu Dhabi and the region overall have them it's stability and that's political and economic stability it is the availability of investable projects companies and markets um and it is uh for lack of a better term rule of law rule of law really is about access transparency and fairness in treatment of all investors equal treatment of all investors um and those things are foundational for any Market that is looking to grow I might add a couple to those one of them is um public sector investment leading the way and showing the way and then crowding in the private sector that is a very big and we we're seeing that in places like Mexico um France Argentina um and and other places where where the public sector is playing a role to try and get the private sector to Crow into uh investable projects and then the last one that I would say is really important is just Market infrastructure um uh the availability the ability to U come in and out of a market whenever you want uh and through as many instruments as you want so that's Market infrastructure um I think the region you know I'd give the region I'd give Abu Dhabi High marks on some of these and some of them we see the progress that's being made yeah I I I I would age and Echo that and and I add one one more thing which is that as I was mentioning before I think all the ingredients are there especially here in Abu Dhabi and and the UAE and and if we're optimistic about the region I'm optimistic about the region this is a great place from which to reach the region there are what two billion people within four hours flight of here and so this is an excellent base not just to take advantage of the opportunities here within the country and within Abu Dhabi but this is a great place to tap into all those opportunities outside side within the broader middle east region as well and I know sort of shami this is sort of what your company has dedicated itself to so I don't know you know if I I'd be interested to see hear what you've seen in the broader region uh Beyond so we believe that if you want to take Healthcare into Africa for example we cannot do it purely based out of UAE we we hedge it with India because we want the workforce to come in so that's the beauty of the window of what we call as the gateway to the world so we can create the product here and take it to the rest of the world so that is what an emerging markets for example we're doing a a lab project right now which is purely to serve the emerging markets and you need the scale play so one thing what we see is the effectiveness of adgm in all these things we are all companies that are working out of adgm and it gives us so much transparency to strike Partnerships to bring in international investors and the capital markets itself is very attractive for someone like me who came into 2007 to start my business and today I I have at least three companies that are listed in the stock markets between uh Healthcare and education so when we talk about bringing Capital we want to bring talent and the first thing that Talent looks for is Healthcare and education so again this is the perfect ecosystem that the leadership and the beauty of UA is the speed of the leadership so they move faster than any one of us they think faster they finish things faster so I think it's a good catch up for us to do the vision is much Beyond even just UA it's it's it's the global play that we want to do and AI is going to I think fuel the whole thing I wanted to round out the conversation by bringing it back to the new era of capital Flows In A polycentric world one of the things we're also thinking about is whether or not we're going to be entering a market environment perhaps next year or in years to come in which globalization so the movement of goods services Capital ideas data and information and people actually slows and I want your take on that particularly as we look at the return of President Donald Trump in the white house next year we could perhaps be seeing a more isolationist United States one that ultimately focuses on uh what could be um backwardation when it comes to globalization so I want your take on that that as well Dean did you want to startop uh sure uh to speak about sort of the polycentric nature of of globalization I actually think uh what we're observing right now is that Global flows haven't decreased meaningfully Global flows have continued largely a pace but the nature of those global flows have changed the patterns of those global flows so it's no longer direct us China China us now we're seeing China Vietnam China Cambodia Cambodia us Vietnam us right and so I think what you're going to start observing again is that there will be a place for globalization globalization will continue a pace but the networks and the relationships will change so I think you'll have sort of broadly sort of the US sphere of relationships you'll have the China sphere of relationships in East Asia so now that's an opportunity actually for someplace else to step in for sort of the let's call it Middle East South Asia Africa uh sphere and and sort of Abu Dhabi could be that place as a capital of capitals so there's uh maybe an opportunity for this region if we did see some of those Trends starting to eventuate CL can you speak to that as well well look we're a global firm we have a network of global offices because we're supporting Global clients and generally our clients want us to help us give them Market access in local markets or their local firms are looking to do more in their Market or look outwards so I I don't feel too concerned about this and I do think we have to put some context around um we've seen lots of announcements um from the in coming Administration we um there's a sequencing and a scoping and a timing of policy implementation and so our view is that uh so just probably implementation is slower and that more moderate implementation actually means that the global economy can absorb the changes more carefully Hy yeah um look I think I I agree I think trade flows um will find other avenues and supply chain will become more resilient um but investment flows will continue to be there to support the establishment of those new corridors and so um if anything over the past few years we've seen investment cross border investment flows continue to increase as different countries have established uh different corridors in order to support their um uh their exports uh so that's kind of one one thought process on this and and and the other I think is interestingly the China plus one has resulted in a lot of um growth in places like uh Malaysia Indonesia Vietnam and and other places that are continuing to find new avenues to export into um frankly everywhere and the third I would say is if the US exceptionalism is there to stay over time well what a great opportunity to consider this the time the point in time opportunity to um part with a past that is dependent on us consumers creating deficits in the US um uh because they're buying all sorts of goods from everywhere and then uh manufacturers and oil producers funding that deficit by buying us treasuries and go towards an environment where you establish more consumer Le investment programs in regions all around the world and and that's what I consider to be a polycentric world I think it's a healthy progression to a different type of an environment and that's a positive thing sham sh will give you the final say so we have seen the worst during Co we' have seen protectionism to the extreme but I think the beauty is what the vision of the country is already laid across is to find a solution for the the world problems right Healthcare we' have seen UAE at the Forefront in in sending Aid to different parts of the world we operate a usfda factory out of Dubai which is growing at ever fastest pace so I think nothing is going to stop the inflow of capital into UA because where else in the world you get such returns at such attractive rates with all the elements put into one so I think this is going to stay I think we are looking forward to the new alliances that will come we normally leave that to our leadership we are focused on business we can we rest assured that these are things not in our pay grade we do what we are good at by providing good Healthcare and attracting people from different parts of the world and I think that's a great place to leave the conversation ladies and Gentlemen please thank them again shamia honey CLA and Robert joining me on stage enjoy the rest of your day