The market sentiment in 2018 was gloomy and investors were aware of what happened. Many lost fortunes and almost gave up their titles as investors since they no longer trust the stability of the market. Others still believe that the overall structure is still robust and has a long way to go. Looking back at the past data, investors who believe in long-term investment can gain more especially when most people are in panic.
Here are the next big things that are expected in the financial world in 2019.
1. Although the 2018 global economy performed a little better than that in 2017, there is a probability that the Fed will not raise interest rates in 2019. However, there is a 33% probability that they would do so once in 2020.
2. The Dollar has already peaked in 2018 and tends to revert back in 2019. We believe the Dollar is going to depreciate relative to EM currencies since it is running out of supporting factors for Dollar appreciation.
3. Crude oil prices will be under pressure amid a supply glut and the global economic slowdown. The OPEC supply cut can partially offset an increased production from elsewhere, notably, the U.S. One of the significant factors affecting the decline in the oil prices is the threatening of US Crude Oil to flood the global oil market at +1.0 million barrels per day in 2019, driven by an easing of Permian bottleneck.
4. The emerging market became more interesting and is expected to outperform in 2019 after its near-bottom performance in 2018. Given the likely slowdown in the global growth, it is believed that emerging marketing equities are going to outperform relative to developed market equities.
5. Liquidity crunch and PE multiple de-rating are in progress as this year’s investment will change from searching for yields to fighting for quality. The economists expected to see the missing of liquidity injection from G3 Central Bank is about -$238.20bn.
6. The yield curve may be flattening for financial rather than economic reasons. Currently, the spread between 2- and10-year yields dropped to the lowest point since the financial crisis in 2008. The significant upward shift in short-dated yield reflects the U.S.’s huge budget deficit financed by short-term debt, while the slightly upward shift in long-dated yield reflects long-dated bonds as a useful hedge for equity correction created by the fear of deflation.
7. Opportunities for ASEAN countries especially Thailand and Vietnam as China will relocate a supply chain to avoid impact from tariffs. The trade war is considered as a catalyst for manufacturing relocation from China To ASEAN. For the short-term impact, there will be a shift of repackaging centers will move almost-finished products from China to neighboring APAC countries before shipping to the U.S. For the medium- to long-term impact, there will be a relocation of production U.S.-China trade tension could hasten China’s exit from labor-intensive sectors, providing opportunities for other developing countries in APAC.
8. Hybrid Cloud will become the dominant business model as it will be more widespread. Companies are realizing that a mix of public and private cloud services could provide the highest efficiency and performance. Enterprise infrastructure are undergoing major changes. 17% growth of the public cloud revenue is expected in 2019.
9. 5G will become the next-generation wireless standard that promises hyper-fast speeds with almost no latency. With 1000x faster in speed, more things could be accomplished in just a few seconds. The coming of the 5G Internet will help get all works done more efficiently, save more lives and live more conveniently.
10. Although the US-China trade war led to the production slowdown causing a drop in sales of industrial robots in 2018, there is still large room for the robotic industry to grow as many jobs are expected to be replaced by robots in the near future.