This article was contributed by Juwai IQI Chief Economist, Shan Saeed.
It is like a train coming at you, and you are not going to stop it by standing in its way. Bedlam in equity markets, turmoil in the financial landscape, geopolitical risk in various geography, political shenanigans in the west, the pandemic getting worse, central banks’ intervention in advanced economies, low-interest rates regimes globally, the Chinese yuan in the limelight in the currency market, the commencement of hybrid wars in Indian Ocean/Arabian Sea and social unrest in few continents would make headlines in 2021. Fasten your seatbelts as 2021 would be tougher than 2020, 2019 or 2018.
At the time of writing this piece, it’s Dec 3, and the US election result is still waiting for the Dec 14 Electoral College decision. Let’s see who will be calling the shots from 2021 to 2024.
The markets are already in a mood and whistling past the graveyard. Investors are feeling nervous. I can foresee valuations taking the pullback and bedlam in the equity markets in the US and across the globe.
Banks will face the pressure in profit margins due to lower interest rate regime. Central banks would intervene in the market to keep their currency low. Still, the yuan would come out stronger and perform better than many currencies due to China’s macroeconomic stability.
Geopolitical risk is getting deeper into the market, and the world is divided into groups – China vs the USA. Countries have to decide their power-play group in the coming two to three months as skirmishes over the Arabian Sea and the South China Sea are getting real. Military and air force exercises are going on among countries, thus signalling warfare’s future direction.
Investors who fathom history and economics have always taken positions in three asset classes:
- Real estate
- Gold & silver