My five big predictions for 2018
I faced five “penalty kicks” where I had to make up my mind early. Here is what I forecast:
1/ Dollar/euro parity. Wrong, though it got to within 5 cents of it. Zero points.
2/ Brent crude “not much beyond $60 a barrel.” Correct. It was only at the end of October that oil went back above the $60 level, where it remains at about $65. One point.
3/ “Big headlines” for President Trump in his business dealings with the region. After the hundreds of billions of dollars worth of deal announced in Riyadh in May, I claim that as correct. One point.
4/ Changes at the top of the two big UAE airlines: Half right. James Hogan left Etihad early in the year, but Tim Clark is still very much in place at the top of Emirates and good luck to him. Half a point.
5/ The embattled Al-Gosaibi family of Saudi Arabia would have their travel bans lifted in the course of the year. Wrong — it looks like another festive season in Al-Khobar as they put the final pieces in place on a deal to satisfy bankers and authorities. Zero points.
So, with 2.5 out of a possible total 5, that represents a 50 percent success rate. Not great, but better than the chances of a goalie saving a spot-kick — about 15 percent according to the football statisticians.
Undeterred, I’m back up on my feet, wiping off the mud, and ready for the next shoot out. Here are the five events I will predict, with the utmost certainty, will occur in 2018.
1/ The Bitcoin price will collapse. That’s the bad news for recent buyers of the cryptocurrency who have piled in to get a slice of its remarkable run. The good news is that the rest of us, and the world at large, will hardly notice. The rise of bitcoin has been an investment phenomenon, and a few people have made fortunes out of that amazing run. But the alternative currency has little connection to the real financial or economic world. It lost 30 percent of its value last week, and the stock marts hardly noticed. When it collapses, only a few will miss it. And there are plenty of other cryptos around to take its place.
2/ The Trump bust is coming. The president likes to take credit for the soaring stock market over the past year — most of which is the legacy of his predecessor’s sound economic and financial governance — so he will have to carry the blame when it all goes wrong, as surely it will in 2018. The S&P is at an all-time high, but so it was every year-end since the financial crisis. Market crises have a habit of coming in the autumn, which next year coincides with the US mid-term elections. Things should be bubbling along in the various geo-political crises the world faces by then too. Sky-high financial markets and political instability make the perfect conditions for a market crash.
3/ King Khalid International airport will be among the first of the Kingdom’s assets to be put under private management in the great state sell-off as part of the Vision 2030 strategy. It has been lined up for privatization along with other assets, and appointed Goldman Sachs to handle the process last year. There have been a few glitches, but these can be ironed out in 2018. Corporatization is the first stage in the process and I’m confident this will be achieved in the coming 12 months, followed quickly by a management deal with a global entity to get it ready for a full IPO.
4/ Citibank will further extend its presence in Saudi Arabia. 2017 was a big year for the American bank in KSA, coming back after a 13 year hiatus and helping organize the biggest bond issues the Kingdom has ever seen. It will be involved big time in the privatization program under way. But it will be not happy to rest there, and I think it will be looking to further expand its commercial activities in 2018, with the approval of the Saudi banking authorities.
5/ The oil price will hit $75 per barrel in the course of the year, but will not stay there for long. The OPEC supplies cut and the deal with the Russians is having the desired effect of draining global inventories and long term market balance is on the horizon. Oil has stayed above $60 for the past couple of months, allowing US share producers to come back into the market, but this has not so far affected crude’s overall recovery. I see a sharp heightening of regional tensions leading to a temporary “spike” in 2018, but it will fall back pretty quickly to spend most of the year in the $60-$65 range.
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