Macroscope | High stakes politics might mean 2018 is a year of living dangerously
As risk-taking turns to risk-aversion, investors will opt for safer-haven plays, bringing money back home into domestic coffers. And emerging markets could be in the firing line
The proverb ‘All’s well that ends well’ is a pretty apt description for the passage of 2017 into the new financial year.
Last year finished on a strong note with global markets hitting record highs amid a strong sense of optimism the trend could extend into 2018.
The proverb means problems occurring along the way do not matter as long as the outcome is a happy one, except there is a caveat. Unless the market fully factors in all the nascent risks 2018 could turn into a comedy of errors.
There are too many uncertainties for markets to turn a blind eye. Many of them revolve around US President Donald Trump’s troubled presidency.
Sure, he has filibustered through his hallmark tax reforms, but he has a whole host of other pressing problems to deal with. A collapse in his political ratings, possible impeachment proceedings along the way and a ‘bigger button’ battle of wits with North Korea threaten to besiege his presidency in the coming months.
While US practices a more isolationist approach to global diplomacy, the emergence of China and Russia is re-drawing the world’s power map.