What's ahead in 'most important week for world economy'

The world economy’s most important week of the year?

That’s what Bank of America strategists asked clients in a report ahead of five days of presidential standoffs, trade tensions and central bank meetings.

Each carries the potential to propel financial markets and shape the outlook for global growth after signs it slowed in the first quarter.

So here’s what to watch for:

Monday

Investors get their first opportunity to pass judgment on what happened at the summit of leaders from the Group of Seven. The gathering ended with US President Donald Trump broadsiding allies via Twitter, undermining the bloc and potentially causing fresh friction over trade.

Tuesday

Mr Trump and North Korea leader Kim Jong Un convene in Singapore for their on-off summit, the first such meeting ever. Mr Trump last week predicted “great success” and said it’s possible he could sign an agreement with Kim to formally end the Korean War. Back in Washington, the government releases a monthly report on inflation that will be a key gauge of how hot - or not - the US economy is getting.

UK Prime Minister Theresa May’s flagship Brexit legislation returns to the lower House of Commons after receiving a battering in the upper House of Lords, where it was amended 15 times. Ministers will be trying to overturn most of those defeats, with a combination of compromises and attempts to win rebel pro-EU policymakers round. In two days of debating and votes on Tuesday and Wednesday, the key questions are about what kind of vote Parliament gets on the final Brexit deal, and whether Britain should be trying to stay in a customs union.

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China's Xi hails free trade and defends WTO

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Wednesday

The US Federal Reserve is set to hike its benchmark interest rate for a second time this year. Chairman Jerome Powell holds a press conference, and he and his colleagues will also publish new projections which could show them tilting toward four increases this year as a whole, rather than the three they hinted at in March. Elsewhere, Argentina’s central bank is expected to keep its benchmark rate 40 percent as it tries to stabilize the peso.

Also on Wednesday, Italy’s auction of debt will draw scrutiny by handing investors another opportunity to react to the election of the populist government and its promises of hefty spending increases. The risks for the securities are already seen in the fact that the gap between Italian 10-year yields and those of Spain is at its widest since 2012. In the UK, inflation data will help the Bank of England determine whether to raise interest rates.

Thursday

The European Central Bank is shifting closer to the end of its bond-buying programme with Thursday’s meeting of policy makers poised to hold the first formal talks on when and how to do it. About a third of respondents to a Bloomberg survey of economists predicted President Mario Draghi will set an end-date for purchases today, while 46 percent said he will wait until July to reveal details.

Vladimir Putin, the Russian president, and Mohammed bin Salman, Saudi Arabia's crown prince, meet at the opening game of the World Cup football tournament. The encounter could influence the global oil market given it comes a week before a crucial Opec meeting in Vienna, providing a last-minute chance for the two leaders to iron out a possible oil-output increase.

China releases retail sales and industrial production data which will shed light on the strength of the world’s second largest economy.

Friday

The Bank of Japan (BOJ) is likely to end the week exactly where it started with no tightening of monetary policy on the agenda. The BOJ is still buying vast quantities of Japanese government bonds and will have been encouraged to keep doing so by data showing its still far off its 2 percent inflation target and that the economy shrank in the first quarter.

June 15 is the deadline for the US to publish the final list of Chinese products subject to $50 billion in tariffs, which could be imposed shortly after. Also on Friday, the Russian central bank sets interest rates with economists currently leaning toward no change in the 7.25 per cent benchmark although there is a chance of a cut.

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DUBAI WORLD CUP RACE CARD

6.30pm Meydan Classic Trial US$100,000 (Turf) 1,400m

7.05pm Handicap $135,000 (T) 1,400m

7.40pm UAE 2000 Guineas Group Three $250,000 (Dirt) 1,600m

8.15pm Dubai Sprint Listed Handicap $175,000 (T) 1,200m

8.50pm Al Maktoum Challenge Round-2 Group Two $450,000 (D) 1,900m

9.25pm Handicap $135,000 (T) 1,800m

10pm Handicap $135,000 (T) 1,400m

The National selections

6.30pm Well Of Wisdom

7.05pm Summrghand

7.40pm Laser Show

8.15pm Angel Alexander

8.50pm Benbatl

9.25pm Art Du Val

10pm: Beyond Reason

MATCH RESULT

Liverpool 4 Brighton and Hove Albion 0
Liverpool: Salah (26'), Lovren (40'), Solanke (53'), Robertson (85')

Who's who in Yemen conflict

Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government

Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south

Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”