1. Volatility is here to stay (for now) so embrace it.
Volatility was the theme of 2018. Looking ahead we expect more of the same, possibly more widely spread across types of investment. Don’t forget, volatility isn’t always bad, so we expect next year to provide plenty of opportunities for investors. Politics – both European and global – will continue to play a major part in market confidence, or a lack of it, in 2019 and ongoing Brexit negotiations pre and post 29 March will continue to destabilise the Pound, affecting the returns of UK investors with international investments (read more about hedging in our blog).
2. World trade worries will ease slightly.
Trade negotiations between the US and their partners are likely to continue to make headlines and drive market movements. However, there has been some progress this year in the case of Mexico and Canada and the hope is that others can be reached in the next 12 months, giving the markets more to be cheerful about.
As for Brexit, we expect there to be minimal EU-UK trade disruption next year which will be dominated by negotiations over the eventual terms of the trade deal after the transitional period ends – assuming talks commence as planned at the end of March.
3. Inflation may start to rise
Wages are beginning to rise in developed countries – but mainly the US – which is a good sign of economic recovery. In the UK and Europe wage progress is slower but forthcoming reforms to labour laws may help boost growth. This could have the knock-on effect of rising inflation in some countries’ economies – possibly prompting the UK or Europe’s central banks to consider raising interest rates to help stem any inflationary rise. This can be a double-edged sword for savers and investors – rising interest rates will give savers a little boost but hit mortgage holders in the pocket, whilst higher inflation makes everyone’s savings and investments worth a little less each year.
4. Sustainability will become increasingly important for businesses.
Japan, China, Hong Kong and Singapore have all recently increased the requirement for companies operating within them to report how sustainably they operate. This is great news for the growing number of investors who are looking for greater choice and variety of ethically-minded investments, particularly in the Asia Pacific and Emerging Market regions.
Elsewhere, demand for ethical investing looks set to continue to rise. US, Australian and European investors and pension fund managers have all recently indicated an increased demand for ‘ESG’ (another name for ethical) investments. As our own research shows (read more about ethical performance in our blog) ethical investments can provide investors with some stability compared to other investments during downturns, as well as benefitting society and the planet. As such, we expect ethical investing to break even further into the mainstream in 2019.
Merry Christmas and a Happy New Year!
This document has been prepared by Wealthify’s Investment team and the opinions expressed here are theirs as at the date of publication. The information contained in this document is not, and should not be construed as, advice nor should it be used to make investment or any other decisions. It should not be distributed, copied or reproduced.