Putting 2020
into Perspective
As 2019 comes to a close after a turbulent year for capital markets, our market analysts have taken a look ahead at what the new year might hold for investors. Their findings have been thematically summarized in 5 informative and thought-provoking articles that provide a comprehensive viewpoint on Swissquote’s outlook for the markets.
«In the context of structural transformations, the market climate will continue to be dominated by day-to-day, headline-induced fluctuations and turbulances. 2020 looks set to be another dynamic year presenting a multitude of challenges and opportunities.»
Michael Ploog - CIO Swissquote
5 for Thought: 2020
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• US elections will dominate 2020
• The curious case of negative yields
• The «Greta Effect»
• Trade tensions? China’s ascendency on track
• Where to look in 2020
US elections will dominate 2020
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US President Trump’s unconventional approach has become the dominant factor in the markets. Trade tensions, central bank policy and volatile geopolitics can all be traced back to the White House. The uncertainty arising from Trump’s unpredictability has shifted global policy action towards the dovish end of the spectrum. We anticipate that Trump’s attitude will even shift up a gear in the race to the White House next year and that the current high levels of monetary accommodation will be maintained.
The curious case of negative yields
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Given strong deflationary forces and sluggish economic growth, global policy will remain loose, with many central banks applying negative interest rates. While the long-run effects of such risk-taking stimuli are unknown, they push up stock prices in the short term. Stocks have become more attractive than bonds, with dividend yields surpassing bond yields. However, negative interest rates have only ever had little positive effect on consumer spending.
The «Greta Effect»
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The «Greta Effect» can now be felt globally, with youth rallies evolving into a high-impact global movement – but also with individuals taking action by adjusting their personal behavior and investment philosophy. More and more people are turning to socially responsible investing (SRI), which promotes sustainability with the aim of generating measurable social and environmental impacts as well as financial returns. We see four key trends that are continuing to evolve in the rise of SRI.
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Trade tensions? China’s ascendency on track
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The trade dispute between the USA and China is not just about soybeans. It is a race for global political, technological, financial and military leadership between the ruling number one world power and the runner-up. At purchasing power parity level, China now has a larger economy than the USA. Friction between the two superpowers is bound to increase and will continue to cause volatility in the financial markets in 2020.
Where to look in 2020
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In this article, we discuss various smaller key topics that we will be watching closely in 2020 and that form part of the structural changes elaborated on in the other articles.
• Switch up? Stocks for yield; bonds for capital performance
• Geopolitical shifts present an opportunity
• Chinese internet
• Ireland: the Brexit play
• Slow reflation trade