SINGAPORE (Dec 31): In 2017, the major economies enjoyed a combination of synchronised growth and low inflation. This scenario — dubbed a Goldilocks environment — was anticipated to continue into 2018 and indeed, the optimism did spill over into the new year. However, things are not that rosy as 2018 draws to a close. While the US economy grew from strength to strength this year, the economies of Europe, China and Japan turned wobbly. 

Virginie Maisonneuve, chief investment officer at Eastspring Investments, calls 2018 a “challenging year” for investors. “A stronger US dollar led to heavy selling across emerging markets; political volatility unnerved investors and asset markets repriced to take into account rising interest rates. The global economy experienced significant currency volatility, as well as a de-synchronisation of growth between the US and the rest of the world,” she writes in a 2019 market outlook report.

“We have seen volatility return to equity markets worldwide in 2018, after an unusually calm 2017,” say Grant Bowers and Matthew Moberg, portfolio managers at Franklin Equity Group. “The synchronised global growth environment that prevailed for the last two years has started to show some cracks, with many global markets seeing growth moderate. The US, conversely, reported the fastest rate of GDP growth in nearly four years in the second quarter of 2018 and remains in expansion [mode], albeit at what appears to be a slower pace.”

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