DBS Macro Insights Livestream - 2020 Outlook: Beyond Economics
9Elections, populism, civic unrest, climate change, geopolitics, cyber security, and great power rivalry; these factors will compete with economic data to drive market sentiments in 2020. Trade war and tech disruption are slated to continue, and secular headwinds to G3 and China would remain. On the plus side, the electronics and auto cycles will likely bottom, central banks will keep liquidity ample and interest rates low, commodity prices are unlikely to jump, and fiscal policy in large parts of the world would play a more proactive role in generating demand. But asset price valuations look frothy in most parts of the developed markets and in some parts of emerging markets, while the broad and sharp rise in leverage is striking. An optimistic scenario would entail an orderly slowdown in the US and China, and a smooth rotation from growth to value and DM to EM assets by investors. But such dynamics would require non-economic factors to remain in check, something we can hope for without being particularly confident.