At a glance
Many of the trends that shaped the global economy in 2018 appear to be still prevalent – from Brexit, to trade wars, to financial market volatility. However, markets have long since priced in the implications of these widely discussed events.
The following economic and geopolitical changes are the ones that I belive UHNWIs should consider when investing in 2019 and beyond.
Recession: Based on the 'ten-year theory' the world is due a global recession soon
Leaderless populism: UHNWIs may start to show a preference towards investing in places with less of a tradition of street protest
The new Vikings: A coalition of northern European nations has emerged based on the logic that their combined voices will have more strength when negotiating with the largest EU states
New energy politics: Will sun-drenched and windswept countries enjoy a surge in energy exports in the future?
Some people buy into the theory that a major economic downturn will occur every ten years. For many countries, the last recession occurred in 2008-2009, which based on the above rule-of-thumb would make the next one due soon.
However, re-pricing has occurred after a number of assets with swollen values corrected in 2018; this could present opportunities for UHNWI investors who are prepared to look at values dispassionately, and buy assets based on long-term prospects.
A new phenomenon has been groundswell movements without formal structure such as the Gilets Jaunes of Paris. If this marks the beginning of a new stage of populism that lacks a hierarchy UHNWIs may start to show a preference towards investing in places with less of a tradition of street protest. This could perhaps favour the ‘S-for-stability’ locations, like Singapore, Scandinavia and Switzerland.
The new Vikings
The UK’s departure from the EU is already having an impact on the internal politics of the trade bloc. A coalition of northern European nations, sometimes referred to as ‘The new Hanseatic League’, has emerged based on the logic that their combined voices will have more strength when negotiating with the largest EU states.
Eight nations signed a foundation document in 2018 setting out their “shared values and views”, which includes calls for the EU to “regain public trust”. A more prominent role on the diplomatic stage could draw investor attention to the economic strengths of the small but wealthy nations gathered along the North Sea and Baltic coastlines.
New energy politics
BP in its most recent Energy Outlook report predicted that most of the future growth in energy demand will be for gas and electricity, which are generally cleaner sources than coal and oil. This reflects a world that is heading for greater reliance on battery power. Will sun-drenched and windswept countries enjoy a surge in energy exports in the future?
The UK has traditionally appealed to UHNWIs looking to live and invest in a country with liberal values, political stability and safe haven qualities”.