Allocation for February 2016

The fall of indexes worldwide in the first half of January was an expected event especially when many imbalances in commodity, currency and financial markets have been occurred.

To look through, we saw massive sales on markets that have been provoked by oil prices fall to minimum in recent years. In addition the pressure on commodity and stock markets was caused by further slowdown of Chinese economy and total flight of capital from Emerging markets (Russia, Brazil, South Africa and India). Moreover, many American and European companies showed weak EPS and reduced their sales growth forecasts for the first half of 2016.

We don’t expect the rebound of the markets in short term considering that ECB is not hurry to increase monetary policy stimulus despite low inflation in EU, while FED adopts the policy of decreasing the money liquidity in the economy.

Threat and challenges in world markets:
- Liquidity crisis in global markets could become the 4th wave of crisis (the last one in current crisis cycle).
- Acceleration of economic slowdown in China.
- Aggressive rate hikes from FED.
- Rapid destabilization in the middle East and jump in oil prices.
- The start of the 3rd World War on the territory of Syria (military of Russia, USA, Europe, Turkey, Persian Gulf states).


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