EM PM, Ecstrat

Emad Mostaque

EM PM

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Thematic (Sector/Industry)

<p>This weekend saw the retirement of long-serving Saudi oil minister Ali al-Naimi and his replacement by the Chairman of Aramco, Khalid al-Falih.</p><p>At 80 years of age, the retirement of al-Naimi had been on the cards for a number of years, with some indications that it had been scheduled to occur five years ago, but was postponed given the need for stability as the Arab Spring erupted in the region.</p><p>Now that he has moved on to a position as advisor to the Royal Court, whether Saudi oil policy will…</p>

This weekend saw the retirement of long-serving Saudi oil minister Ali al-Naimi and his replacement by the Chairman of Aramco, Khalid al-Falih.At 80 years of age, the retirement of al-Naimi had been on the cards for a number of years, with some indications that it had been scheduled to occur five years ago, but was postponed given the need for stability as the Arab Spring erupted in the region.Now that he has moved on to a position as advisor to the Royal Court, whether Saudi oil policy will…

New Saudi Oil Minister, Old Saudi Oil Policy

<p>It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the Saudi-US relationship and months of press coverage culminated in the announcement of Saudi Vision 2030 today.</p><p>This note analyses some of the drivers of the changes we have seen in Saudi policy and the likely impact of these going forward on local markets and the oil price.</p><p>The upshot is that I am, just as was the case in 2015, once more bearish on oil and oil-related equities into summer, although I retain my bullish view longer term.</p><p>This should also prevent significant appreciation in Middle East markets short-term, although it is likely to be an interesting few years ahead as reforms, many of which necessitate increased economic and market liberalization and sharp increases in FDI, start to come in force.</p><p> </p>

It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the Saudi-US relationship and months of press coverage culminated in the announcement of Saudi Vision 2030 today.This note analyses some of the drivers of the changes we have seen in Saudi policy and the likely impact of these going forward on local markets and the oil price.The upshot is that I am, just as was the case in 2015, once more bearish on oil and oil-related equities into summer, although I retain my bullish view longer term.This should also prevent significant appreciation in Middle East markets short-term, although it is likely to be an interesting few years ahead as reforms, many of which necessitate increased economic and market liberalization and sharp increases in FDI, start to come in force. 

Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

Macroeconomics

<h2><strong>Summary points</strong></h2><ul>
<li><div class="content-highlight"><strong>1986 remians the best comparable for oil prices now in our opinion.</strong></div></li>
<li><div class="content-highlight"><strong>Adjusting the oil price for the action of the dollar improves the analysis.  The dollar and oil/commodities are different and should be treated as such.</strong></div></li>
<li><div class="content-highlight"><strong>Fundamental factors of supply and demand provide a mixed picture for oil.  The 'energy feedback loop' is often overlooked.</strong></div></li>
<li><div class="content-highlight"><strong>The best the <em>market</em> can do is assume that today's real oil price will be the oil price in 12 months time.</strong></div></li>
<li><div class="content-highlight">
<strong>Financialisation of commodities is a big</strong>…</div></li>
</ul>

Summary points
1986 remians the best comparable for oil prices now in our opinion.
Adjusting the oil price for the action of the dollar improves the analysis.  The dollar and oil/commodities are different and should be treated as such.
Fundamental factors of supply and demand provide a mixed picture for oil.  The 'energy feedback loop' is often overlooked.
The best the market can do is assume that today's real oil price will be the oil price in 12 months time.

Financialisation of commodities is a big…


<p>The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of 47 convicts including Shia cleric Sheikh Nimr al-Nimr.</p><p>While some claim this is the latest manifestation of a historic Sunni-Shia hatred, digging deeper shows other, more important factors at work that could determine the fallout for the region.</p>

The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of 47 convicts including Shia cleric Sheikh Nimr al-Nimr.While some claim this is the latest manifestation of a historic Sunni-Shia hatred, digging deeper shows other, more important factors at work that could determine the fallout for the region.

China

Sino Geophysical Company Limited engages in technical services of seismic processing and interpretation in oil exploration for oil companies. The Company also provides consultantation services on reserve volume assessment of oilfield blocks.

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Sino Geophysical Co Ltd A (300191 CH)

New Saudi Oil Minister, Old Saudi Oil Policy

This weekend saw the retirement of long-serving Saudi oil minister Ali al-Naimi and his replacement by the Chairman of Aramco, Khalid al-Falih.At...

Emad Mostaque

Saudi: A New Hope?

It has been an interesting few weeks for observers of Saudi Arabia as Doha oil freeze talks failed, concerns re-emerged over the stability of the...

Emad Mostaque

Oil After 50%: Where Now for Stocks?

Summary points 1986 remians the best comparable for oil prices now in our opinion. Adjusting the oil price for the action of the dollar improves...

Mark Artherton

The Sunni-Shia Canard

The Middle East has already hit the headlines in 2016 as the relationship between Saudi Arabia and Iran deteriorated further after the execution of...

Emad Mostaque

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