Abacus | What could sneak up and derail the global bull market in 2018?
Most signs point to continued growth worldwide and should leave investors optimistic, but the threat of inflation always lurks in the shadows
The world’s financial markets have begun 2018 in the same bullish fashion that they ended 2017. In the United States, stock markets celebrated the new year by promptly advancing to new record highs. And this performance was echoed in Asia. In Hong Kong the benchmark Hang Seng index gained 2.7 per cent in the first three trading days of 2018, adding to the 36 per cent run-up recorded in 2017.
Investors are largely confident this upward trend will continue through the coming year. Underpinning their confidence is the first simultaneous global upswing the world has enjoyed in years, with each of the major economic regions growing solidly at once.
In China, the rate of growth has moderated in recent years. But Beijing has so far avoided the financial crunch many outside observers feared. And by trimming excess capacity and pushing state concerns to deleverage, policymakers have established growth on a more sustainable basis, at least for the next year or so.
Meanwhile, emerging economies in Asia have been lifted by the China-driven revival in commodity prices, coupled with last year’s weakening of the US dollar, which made servicing their foreign debts easier.