Tag Archives: Bond

Market outlook 2016: what to expect for the next year

December is time to analyse the results of our investments and look what may happen in the next year. What are the expectations, forecasts and outlooks for 2016?

Macroeconomics

Last IMF projections about the GDP assumed that global economy would grow more than in 2015. India, ex – Soviet Republics (except Russia), Mexico and the developed countries will head this positive evolution. China will grow, but at a lower pace. The worst results are for Brazil and Russia, where there will be a negative growth.

Central banks

Next week Fed meeting will decide about the possible rate hike after 10 years and some think that the US central bank have reasons to do it, as growth and employment are strong in the first economy. However, a rate hike could have negative effects for the dollar, as it would strengthen against the euro (possibly till the parity) and exports would be more expensive. What is given for sure is that the ECB and the BoJ will remain their dovish position due to the weakness of the recovery in their areas.

Stock markets

News are not specially good for US stocks, as several experts agree in a low growth or even return decrease in the S&P in 2016. On the other side, European stocks would outperform American ones, although analysts warn about the effects of a weak economic growth in 2016.

Bonds and commodities

Oil will still remain weak or even cheaper, if we take into account some forecasts. OPEC countries do not cut their production and US inventories are at the highest level. The downward trend is also sure for the rest of commodities, as Chinese lower growth will condition this markets, because the Asian giant will demand less.

What the bonds refer, there will be not much changes, as central banks will still maintain its current policy, apart from the possible Fed exception, whose possible rate hike will not have an enormous effect in the yields.

That’s the general market consensus. Of course, life is always open and there can be surprises that can move more positive or negative: the next US president election, the evolution of Daesh and the Syrian war or any outrageous predictions that Saxo Bank typically publish at the end of the year… hopefully, none of them happen.

Stock exchanges: something is changing in the financial landscape

Have you ever thought about the evolution of the financial markets since the beginning of the century? If we take some figures, we can get some ideas about the deep changes in this landscape.

Let’s begin, say, for the global market capitalisation. If we take the figures from the World Federation of Exchanges, it multiplied 3.5 times from 2003, January, to 2015, May. That means, in dollars, from 20.3 trillion to 70 trillion. This evolution has taken place when the world experienced in the middle of this period the worst financial and economic crisis since the 1930’s. The most amazing evolution happened in Asia (more than 6 times, from 4.3 to 26.3 trillion).

The number of stock exchanges has also jumped from 44 to 73 markets around the world. This figure is interesting, because there were two trends in this timeframe: several mergers in the developed countries and new exchanges in emerging markets. In Asia, there have been five new markets created in these years, and 9 more in the Middle East.

Another data to take into account refer to the stock market ranking by market capitalisation. Although NYSE maintains the top 1 in the whole period, there are 4 markets from Asia in the top 10: Shanghai and Shenzen have joined the group formerly composed by Tokyo and Hong Kong. The capitalisation of both Chinese exchanges soared from 0.5 to 10 trillion in 12 years. There has been also a deep evolution in the Indian markets (from 0.2 to 3 trillion), although not so amazing as in China. This is the top 25 in 2003 and in 2015.

Ranking top 25 largest stock exchanges

Another interesting trend to get from the Stock Market statistics is related to the assets traded. Do you know how many ETFs were traded in 2003, January? Only 48 and almost the half were traded in Japan. And in 2015, May? 6,872 ETFs. In these years, Japan does not play almost any role and the kings in the ETF trading are NYSE, Deutsche Börse, Swiss Exchange, Euronext and Mexico, in descending order.

And finally, what is the asset that registered a fall in the listing? Yes, bonds. The number of listed bonds fell down a 37%, from 68,304 in 2005 to 43,043 in 2015. Korea and India are the main issuers, with more than the 50% of the listed bonds.

Regular news is sometimes a trouble to find the deep streams that are moving finances. There are relevant changes in regions and financial instruments. We are living an interesting period.