To usher in 2019 are some of the global economic and political mobocracies that have put business people on the verge of adverse selection coupled with fear when it comes to making the right type of investment decisions in different countries, securities, and many other financial products that are traded on stock markets. Irrefutably, 2018 has axiomatically and undoubtedly had a series of economic gaffes in policy making as well as political shakeups. No doubt that such infrequent policies have left investors wallowing in the miasma of confusion on where exactly to put their next investments.
Global political sentiments seem to have dilapidated and diluted the current economic prospect. Notably, the global political arena that is full of dismay and uncertainty on how the leading economies are going to weather out some of the critical decisions that are threatening their dominance and influence in the global market. Investors have cold feet on the veracious investment strategies to take and the nature of portfolios they should use to diversify their risks.
Of great importance is to apprehend and be cognizant of the intricateness and intertwinedness relationship between business, economics and political power that has in the past been the source of deviation from the Invisible hand concept advocated by Friedman that recommend the economy always balances itself and achieve equilibrium without political influence. The free market concept seems to have been shrugged off by the global political dynasties whose countries have infiltrated in every aspect of trade. Such countries’ sentiments greatly influence the flow of funds across the world. As our dedicated readers, Buziness Stretch deciphers some of the political and economic insights that the investors are profoundly watching never to be heedless of the consequences that await if some of the discussed below issues play off their wish.
2019 Economic uncertainty and the dwindling liquidity and volatility in stock markets
Firstly, let us look at the stock exchange markets across the world starting from Tokyo stock exchange market, London stock exchange market and New York stock market. It has been lamented that the stock markets have been shedding off at alarming rate in a decade since the last economic crisis in 2007-2008 which becomes inevitability a thrush for a future financial crisis. The reason is that many investors have speculated much ever since the economy recovered. Consequently, investors have been lured by actively purchasing shares since the Wall street crash.
Leading agencies such as the Federal reserve have been on the lead to caution investors of imminent economic crisis in the near future. Subsequently, this has exacerbated the indecision in the future regarding the worthiness of the investments made. In the recent past, Wall Street has sent mixed signals. Both loses and profits have been witnessed periodically throughout the year, and this bespeaks of the fragility and volatility that investors have to face in 2019. Similarly, economic woes have also affected Dow Jones that has recorded monumental losses in 2018.
Risky trading practices such as “carry trade,” and “buy-to-let” are mirror reflection of the Subprime Mortgage crisis that triggered the 2008 economic crunch. This was after the US households and financial institutions made speculative investments in houses. However, the value of shares and the prices did not rise and got them dumbfounded when the shares on the Wall Street began losing value sporadically.
The periodic changes and instability in exchange and interest rates have been a major disquiet for investors across the world because they were among the key elements that led to the 2008 financial crisis. The recent interest rates hike by the Fed since the economic crisis has been of concern among risk-averse investors who speculate on “soft landings” that have triggered excessive borrowing which can disastrously influence demand and supply.
Mixed signals from stock exchange markets are not the best thing that investors wish to hear because it means that their speculation for more profit lays in the balance of mind-boggling loses that cannot only erode their returns but also the invested capital as well. In summary, a desirous look at the recent occurrences in the global markets have eerie similarities of precursor events to the economic disaster of 2008 and Great Depression crisis. Therefore, the certainty of future investment in 2019 is exceedingly grim.
2019 Economic uncertainty and the US-China
The trade wars between the US and China in the recent past under Donald Trump administration has been ambivalent at the international level threatening thousands of jobs and investment between the two countries. The US-China trade war cannot be belittled anymore owing to the already exemplified dire consequences. For instance, companies such as Ford Motors Company has already cut on jobs in China and lost over $1 billion.
The imposition of $250 billion tariffs on Chinese by the US and $60 billion tariffs on US goods by China has made Chinese companies to have a surplus in production and lack access to her key market, the US. Subsequently, the incessant tensions between the two global leading economies have resulted in investors being indifference on how to navigate their investments plans, especially when you consider the fact that many of the US companies have their production in China due to cheap labor supply.
Investors are watching the progress momentarily. Therefore, investors are considering the best investment decision to make when it comes to where to stage their investments. Interestingly, the pursuance of US interests has direct impacts on other countries and is likely to influence the move that investors will take.
2019 Economic uncertainty and the Brexit
With the current quandary and incongruity of the Brexit deal both by the UK and the EU, investors within the globe are startled by the inconclusiveness and capriciousness surrounding the exact Brexit deal that Brittan will strike with their counterparts in the EU in regard to trade deal such as taxes. Due to the recent dubiety about the nature of the Special deal that Theresa May claim to have reached with EU, investors are not quick to set their investment in the UK with many of companies already moving out due to mistrust concerning the nature of the deal that Britain will reach with EU and; its ability to protect their business. Investors are circumspect to invest in Britain are keen on the nature of the deal that the country will strike with EU by March 2019 when the special Brexit plan is expected to officially exit UK from EU. Until then, many companies will hold back on their investment in fear of aggressive tax policies if Britain fails to reach an appropriate deal with EU.
Many of the Theresa May critics have lamented on the shambolic handling of the Brexit deal with EU with suspicions that the deal will only make the country unattractive to investment if a debauched deal is reached. Of course, any divestment to global big economies such as Britain has ripple effects on investment activities in other countries whose economies are pegged and hinged on it and, hence becoming a key issue that investors are monitoring before making investments in Britain by March 2019 when the deal is to be reached and the exit plan for Britain triggered.