The past year has brought with it a number of big surprises in economic terms – who would have thought, looking ahead at the end of 2014, that China would crash so spectacularly over the summer, with the Shanghai Composite index dipping 8.5%, and repercussions felt in markets around the world? Or that oil prices would remain so low, or that at the end of 2015 the Federal Reserve in the US would announce its decision to raise interest rates for the first time in nine years?
As the global economy continues to recover from the crash of 2008, such twists and turns are inevitable, but that has not stopped financial experts trying to predict what may happen in 2016. So what have they been saying?
No time for emerging markets
China should be a lesson to us all, according to The Telegraph
, with Kyle Caldwell and Ed Monk asking Talib Sheikh, part of the team managing JP Morgan Multi-Asset Macro, for his advice. The fund returned 9.6% this year, partly due to pulling back from emerging markets.
“We knew that China had been getting weaker and were surprised that everyone else was so surprised in August when markets fell,” says Sheikh.
He believes emerging markets will not deliver big returns in 2016, and suggests instead to keep an eye on large companies in the US and Europe, particularly financial firms returning to strength.
The Telegraph comment
Interest rates and oil prices
In the wake of a 0.25% rise in interest rates, John S Kiernan, writing for WalletHub
, focuses on the US economy. Nestor Azcona, Assistant Professor of Economics at Babson College, is quoted as saying that this rise “will also cause a rise in mortgage rates”, with the website adding that more buyers will take the plunge before prices get too high.
It also predicts that less credit will be available for families and small businesses that don’t have good credit scores, and defaults will rise. According to CardHub debt studies
, the average household in the US with a credit card owes $8,071 – close to the levels seen in the run-up to the recession.
On a global level, the article predicts a modest rise for oil prices, although “things will get worse before they get better”. Mark Johnson, Assistant Professor of Finance at Loyola University, Maryland, says: “At some point, oil will rise as the active rig count continues to decrease and production starts to slow.”
New broker powers
In an article on Financemagnates.com
, Amit Sagiv, Product Marketing Manager at Leverate, gives his thoughts regarding the binary options market.
Sagiv sees traders and brokers becoming more capable because of the tools at their disposal. “Mobile is becoming more natural to use and preferred by traders, and is thus developing features exclusively for mobile,” he cites as one example.
Other forces will bring their own changes. “A big topic in the industry is regulation,” Sagiv adds. “It is ever changing, it is in some instances complex and it will continue to become stricter. As this becomes the norm, more brokers will continue to get regulated, adding legitimacy to the industry.”
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