Asian markets likely to remain volatile in 2020 as US-China trade war continues to unnerve investors
- Geopolitical risks could make markets ‘choppy’ next year, although a full-blown global recession is unlikely, analysts say
- Investors should expect ‘modest’ returns in 2020, according to BlackRock
Almost 18 months since it began in earnest, the US-China trade war remains one of the biggest causes of uncertainty – and sleepless nights – for investors as they seek to navigate an environment of slowing growth and increasingly volatile markets, according to analysts and investment strategists.
That may not change next year, even if US President Donald Trump fails to secure re-election to the White House, analysts said.
Belinda Boa, head of active investments for Asia-Pacific and chief investment officer for emerging markets at BlackRock, said the world’s biggest asset manager is being “far more cautious” as it looks ahead to next year and believes geopolitical risks, including the trade war, will be the “key driver” for the economy and markets in Asia next year.
“Trade policy is and has been increasingly unpredictable and we’ve seen a surge in trade protectionism,” Boa said. “This deviates from decades of globalisation and of free trade. We’re moving in a very different direction.”
Of more than a dozen market strategists interviewed for this story, a majority remained positive about equities generally, including Chinese stocks, in 2020, given the low interest-rate environment and an expected recovery in corporate earnings next year. They warned, however, that returns could be “modest” or “moderate”, saying the trade war and the US elections were among the biggest risks to markets next year.
