Finance

If last year was any indication of what financial markets will look like in 2019, we are in for a very bumpy ride. Last December alone, the Dow Jones Industrial Average fell and rose more than 8 percent as finance experts struggled to make heads or tails of a bizarre political climate, unsteady interest rates and global tariffs.

Macrotrends such as shifts in demographics, environmental awareness, urbanization are transforming one of today’s most fundamental asset classes, infrastructure. Required for the operation of any society, infrastructure is providing investors with impressive returns along with opportunities to capture the benefits of these megatrends; infrastructure investment has consequently shown impressive growth in the past decade.

Over the past year, we have seen the UK financial services industry undergo significant changes, with new regulations such as PSD2 driving innovation and changing the way we send and receive money. But what does 2019 hold? A number of key events are on the horizon that make the coming year an uncertain one for the UK’s financial services firms.

The sharing economy is forcing banks to compete with dynamic tech firms outside the traditional financial sector. While competition is key, “Uberization” is also creating opportunities for synergy between banks and P2P platforms.  

In spite of the recent rise of protectionism amongst major trade partners, international trade growth is strong, with emerging markets providing the main impetus. Trade growth could be even stronger if not for the shortfall in trade financing supply relative to demand, a gap that is partly due to regulation compliance. Technology is coming to the rescue, not only in addressing the trade finance gap but ameliorating operations throughout trade channels.

The European Commission’s Capital Markets Union Action Plan, introduced three years ago, is intended to make capital more readily available to businesses and encourage economic and job growth within the EU. Substantial strides have been made, yet there is much more to do, especially as subsequent events such as Brexit have altered the landscape. How far has the CMU Action Plan progressed to date, and how much farther has it still to go?

Our world has never been more connected, thanks to the internet, and this is especially true in commerce. Via digital communication, the consumer can deal directly with multiple traders, from small to mammoth, of products and services without the assistance of an intermediary. The new network economy introduces opportunities for both cooperation and competition. What are the four main trends in today’s markets?

Relations are growing frostier globally, as political leaders become more nationalistic. And this change in climate is impacting economies, rendering them less cooperative. Two significant changes affecting the global business cycle include the US Fed’s tighter monetary policy, the impacts of which have rippled throughout the world, as well as the geographical shift of the centre of manufacturing production to the East, to the dismay of some Western leaders.

Money laundering and terrorism financing are serious issues that banks must address, especially as too many financial institutions are complicit in enabling the flow of unlawful funds. Unfortunately, the need to act decisively has also resulted in a disabling tightening of trade finance, sorely needed for economic growth. The new Asian Development Bank Scorecard seeks to ameliorate the inadvertent consequences of AML and CFT compliance.

Little is more valuable to financial-market participants than accurate predictions of future growth. With interest rates on the rise in the US, investors are anxiously looking for indications of an impending recession. But what are yield curves really telling us about future growth prospects—in the United States and also in Australia? Is dreaded recession in the cards, or is modest slowdown more likely?