2014 was a year of remarkable returns in equity market. Even with poor geopolitical situations from Ukraine to Middle-east- Investors enjoyed the Bullish fun feast and Dow theorist licked their chopsticks,but events are lining up a different way . 2015 likely will be a year of volatility and uncertainty
Here are the 4 reasons why 2015 will be a rocky road for Investors:
1.If US Economy continues to grow further FED will raise Interest rates.
The US economic reports continues to give surprises and FED’s price stability mandate to keep the rates lower is disappearing along with the each step of Improvement.Inflation is stabilizing in the world’s largest economy, 2014 was an ultimatum for USD. With Q2 2013, Emerging market rout in Mind any tightening from US may wreak a Havoc on Emerging markets especially BRICS
2.China’s Growth and Central Bank Policy Agenda
China is on the verge of Deflation, Debt value in the country’s balance sheet is enormous. China supplies the world with 2/3 of goods and fundamental source of global consumer prices. Exclusively china surprised the world with excess cuts during the end of 2014 and chosen the growth over reforms. Much of the PBOC stimulus came after Bank of Japan’s aggressive policy moves.
3.Central Banks and Divergent policy packs
Global G20 Central banks moving in the opposite direction for the first time since the period of Cold war.This Historical mark, ignored by Investors who are still living the dream of 2008 aftermath periods.ECB will be the most watched one in Developed world-RBI will be the practical list in Emerging Markets, India is attractive now due to improving fundamentals, and higher interest rate around 8% in the low yields environment, which might bring in massive capital inflows.
4.Russia’s Death match with US Hegemony
Ukraine crisis will be the turning point in history .Russia never suffered such an economic loss in it’s 100 years period after World war.US had a string of odds in it’s favor while dealing with Ukraine crisis. Oil prices collapsed, Ruble devalued, Russian Central bank lost the reserves to defend the currency and Russian economy moving towards the path of recession. All this came after global sanctions on Russia which further soured the relationship of Russia and West with US behind the game. Further collapse in Russian economy would create an uncertain environment in the Markets.