The year 2016 has been active for global markets to say the least, and 2017 is looking equally threatening to send the markets searing.
With BrExit having stressed the UK market and sending the pound spiralling at times, along with aftershocks being felt across world; the next twelve months could likely see batches of volatility as referendums and elections loom across Europe. These are potential hurdles on the immediate horizon, which could have a dramatic effect on the value of the Euro going forward – something stock and yield investors have to be wary of, if they are not already.
Take for example the Italian constitutional referendum at the beginning of December. This has the potential to derail Italy’s continued adoption of the EU’s and Brussels’s policies. Such a vote could take the Euro into unchartered territory – never before has a major EU nation, a founding member, voted to reduce the EU’s mandate.
Close on the heels of the Italian vote comes the French elections in early Q2 next year. Early opinion polls released in September this year show the right wing parties polling well against the centre and left wing parties threatening to bring in an EU sceptic to the helm of France, which can once again potentially impact the Euro. Germany goes to the polls for the first time in 5 years in September and this will add to challenges for the Euro as well.
BrExit? – maybe, maybe not. Fotolia_113305240
The Syrian refugee crisis could become the deciding factor in next year’s German election and be another negative for the Euro. These factors are a continuum of indications on the fragility of the European markets today, which happen to be too settled for comfort to withstand any changes. In such a market, investors have either the option of wagering in these volatile conditions or to look into the potential of the emerging markets.