Key Events for Investors to Watch in 2019January 29, 2019
2018 marked a tumultuous year for stock markets across the globe. The ups and downs that markets experienced can be attributed to key events that shook the international political economy. One of these is the Sino-US trade war. Stay in the know with this handy guide on what to expect in 2019.
Thailand held their general elections on 24 March 20191. The first election since a military coup in May 2014, led by General Prayut Chan-o-cha, deposing the previously elected government and installing a military body known as the National Council for Peace and Order (NCPO). Civil rights, including the right to vote, were suspended indefinitely by the NCPO.2
Despite declining 8.09% in 2018, the SET (Stock Exchange of Thailand) Index posted 5 years annualized returns of 7.14%.3
Get your Thailand Market Outlook fix from our written piece and videos!
United Kingdom (UK)
The UK was set to formally exit the European Union on 29 March 2019, with the terms of the Brexit deal still facing uncertainty. In the event of a “no-deal Brexit”, various rules, permits and accords will fall into limbo. Trades will be subject to World Trade Organization tariffs and border controls. With UK Prime Minister Theresa May holding off the crucial Brexit vote on 11 December 2018, uncertainty is high, with the pound dropping to an 18-month low against the dollar.4
Following the Brexit referendum in June 2016, the FTSE 100 fell more than 5% over 3 days. The FTSE 100 Index has declined 8.7% in 2018, with 5 year annualized returns of 3.88%.2
Brexit has been postponed after Prime Minister Theresa May failed to reach a deal that satisfied the UK Parliament. The new Brexit deadline is 31 October 2019.
United States (US)
The US FOMC Meeting took place on 19 – 20 March 2019, with the latest update being that there will be no more interest rate hikes in 2019.11
Amidst such uncertain times, stocks from stable sectors – which are also called defensive sectors – might be the way to go. Here are 3 defensive sectors that investors may consider amidst the volatile market in 2019!
Indonesia’s General Elections was held on 17 April 2019. Incumbent President of Indonesia Joko Widodo, also known as Jokowi, ran for re-election against former general Prabowo Subianto, who lost the race against Jokowi back in 2014. The President, Vice-president and members of the People’s Consultative Assembly also contested in elections on the same day in a historic occasion for Indonesia.6
With the Jakarta Composite Index posting a 0.28% decline for 2018, Indonesia still remains a country with potential investment opportunities. This can be attributed by the fact that it is one of the fastest growing economies in Asia, coming in second only to Vietnam, with 10% annualized growth over 5 years.2
Interested to know more about the Indonesia investment landscape? Here are some materials for your perusal:
European Parliamentary elections are set to be held on 23-26 May 2019. Post Brexit, the number of Members in the European Parliament will decrease from 751 to 705. Populist parties are expected to gain seats this election, which could mean tougher laws on immigration.
The Philippines will be conducting their midterm elections on 13 May 2019, where the winners will take office on 30 June 2019. Seats in the Senate and House of Representatives will be up for contest.7
The G-20 Summit was held in Osaka, Japan, on 28 – 29 June 2019. Prior to the summit, markets around the world swung between gains and losses as uncertainty shrouded the markets. Topics discussed include contentious issues like the trade war and climate change, with leaders reaching a consensus on topics ranging from the global economy to plastic waste. By the end of the summit, the US and China agreed to resume trade talks, temporarily easing the tension that has contributed to a global economic slowdown. President Donald Trump also declared that US technology companies could once again sell to Chinese technology giant Huawei, effectively reversing the ban imposed on May 2019.12
Stock markets rallied when trades resumed on 1 July 2019 following the fruitful G-20 Summit.
The US FOMC Meeting took place on 19 June 2019, with the Fed making the decision of maintaining the Fed Funds Rate around 2.25%-2.5%. The US Fed also hinted at possible rate cuts in future, pending the global economic outlook.
On 21 July 2019, Prime Minster Shinzo Abe declared victory in Japan’s national elections, with polls indicating that his party has secured a majority of seats in the upper house of Parliament. He is now set to become the country’s longest-serving Prime Minister.
The ruling Liberal Democratic Party (LDP) won 71 of the 124 seats in the 245-member House of Councillors, a few votes shy of the super majority required to complete its longstanding goal of changing the county’s pacifist constitution. A two-thirds majority in both houses is required for Prime Minster Abe to call a national referendum to amend the constitution. Polls suggest that the majority of the public remains unconvinced about the need to amend the constitution, which is not seen as a high priority at this point.13
There was minimal impact to the Nikkei225 index on 22 July 2019 as this was an expected outcome of the election.
The US FOMC Meeting took place on 31 July 2019, with the Federal Reserve reducing its benchmark interest rate by a quarter of one percent to a target range of 2% to 2.5%. The FOMC minutes from the meeting mentioned that the cut was an adjustment, serving as a form of “recalibration” in response to changing conditions due to “implications of global developments for the economic outlook as well as muted inflation pressures.” However, the committee reaffirmed the current state of growth as “moderate” and the labour market as “strong”. This was the first rate cut by the central bank in more than a decade.14
Budweiser Brewing Company APAC listed in the Hong Kong stock exchange in September and began trading on 30 September 2019, following the postponement of its IPO in July. It raised USD 5 billion in its IPO, making it the world’s second-biggest sale of 2019, after Uber Technologies. The shares – priced at HKD 27 each – were available for trading one day before its official listing in the Hong Kong Pre-IPO market.
Interested to trade Hong Kong shares one day before its official listing through the Hong Kong Pre-IPO? Check it out now!
The US FOMC Meeting took place on 18 September 2019, with the US central bank cutting its benchmark interest rate for the second time this year, leaving the current US interest rate slightly under 2%.
Federal Reserve Chief Jerome Powell vowed to do whatever that is needed to keep the economy growing, making mention that the Fed expects the economy to remain strong and inflation to remain around its target of 2% following the second rate cut.15
The 43rd Canadian General Elections is scheduled to take place by 21 October 2019. The 2015 election resulted in the Liberal Party attaining a majority, with Justin Trudeau being sworn-in as Prime Minister.
Canada, one of the top 10 economies in the world, recorded a GDP of USD 1.7 trillion in 2018. The Agriculture, Mining and Petroleum industries are the primary sectors in Canada’s economy, with the country being one of the world’s largest exporters of Minerals and Agriculture products.
President of the European Central Bank (ECB) Mario Draghi is due to step down on 31 October 2019 following the completion of his 8-year term. The President heads the Executive Board, Governing Council and General Council of the ECB. He also represents the Bank at high-level EU and international meetings such as the G20 Summit.8
Japan will increase sales tax from 8% to 10% to alleviate national debt and pay for healthcare costs. With higher taxes, consumer spending may be impacted and this may affect Japan’s economic growth. However, the planned hike could still be scrapped if market conditions point to a major recession.9
The 2019 Australian Federal Elections will be held on or before 2 November 2019 to elect its 46th Parliament. Australia is one of the few nations to enforce compulsory voting, where voting is regarded as a citizen’s duty rather than a right.
While the S&P/ASX 200 Index fell 0.6% in 2018, it has one of the highest dividend yields at 5%, largely due to Australian bank shares. Commonwealth Bank (CBA.AU), the largest in Australia with a market cap of 122 billion AUD, currently has dividend yield of more than 6%.3
Hong Kong’s District Council Elections is expected to be held in November 2019. All 18 District Councils, totaling 452 seats, will be up for election.
Hong Kong’s Hang Seng Index was not spared from trade jitters, tumbling more than 11% for the year 2018. Business groups in Hong Kong are worried that the US administration under President Donald Trump will end the city’s preferential trade status as their autonomy from Beijing comes into question.10
The US FOMC Meeting is scheduled on 11 December 2019, followed by a press conference.3 Investors are on the look out to see if there will be a final rate cut at the last FOMC meeting of 2019.
Watch the Financial Markets Keenly
The confluence of events above are set to keep investors and traders on their feet, as they keenly watch major events unfold and look for signs of market volatility.
In 2018, trade tensions between the US and China have dominated news headlines, causing jitters in the financial markets, as observers weighed the impact of the trade spat.
Against the backdrop of 2018’s developments spilling into the new year, what can you expect in 2019?
Keep your eyes peeled for further developments!
Information was written on 31 Dec 2018, but has since been updated on 11 October 2019.
- 1 https://www.channelnewsasia.com/news/asia/thailand-s-election-commission-sets-feb-24-election-date-11020602
- 2 https://www.reuters.com/article/us-thailand-politics/thailand-will-stick-to-2019-date-for-general-election-deputy-pm-says-idUSKCN1MD0EP
- 3 Bloomberg
- 4 https://www.bbc.com/news/uk-politics-46509288
- 5 https://www.federalreserve.gov/newsevents/pressreleases/monetary20180525a.htm
- 6 https://www.scmp.com/news/asia/southeast-asia/article/2158990/former-indonesian-general-prabowo-subianto-poised-name
- 7 http://cnnphilippines.com/news/2018/10/11/Senator-certificate-of-candidacy-2019-elections-Philippines.html
- 8 https://www.economist.com/finance-and-economics/2018/07/19/mario-draghis-replacement-is-already-being-discussed
- 9 https://www.businesstimes.com.sg/government-economy/japan-unveils-sales-tax-hike-in-october-2019-from-8-to-10
- 9 https://www.straitstimes.com/asia/east-asia/hong-kong-fears-trump-will-end-special-trading-status
- 10 https://www.bbc.com/news/uk-politics-47889404
- 11 https://www.cnbc.com/2019/03/20/fed-leaves-rates-unchanged.html
- 12 https://www.forbes.com/sites/davidphelan/2019/06/29/trump-surprises-g20-with-huawei-concession-u-s-companies-can-sell-to-huawei/#73ace22f1e21
- 13 https://edition.cnn.com/2019/07/22/asia/japan-election-result-intl-hnk/index.html
- 14 https://www.cnbc.com/2019/08/21/federal-reserve-releases-minutes-from-july-meeting.html
- 15 https://edition.cnn.com/2019/09/18/economy/federal-reserve-rate-jerome-powell/index.html
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