2015 Global Market Outlook - Overview

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Heading into 2015, two things to be noted: US rate hike as well as oil price plunge. The consequences of US rate hike are US market is likely to experience lower growth and higher volatility, despite stronger economy. Canadian economy is torn by the plummeting oil price indicated by the surprise bank of Canada rate cut, and will take some time to recoup with the loss even after oil price stabilizes. Thus need to look into international market and alternative investment in order to seek diversification and growth.

The effect of falling oil price are drastically different on countries. For every $1 drop in oil price, China saves roughly $2.1 billion, while Russia loses about $2 billion. The biggest winners are oil importers: China, India, Japan, Indonesia, and other Asian countries. The biggest losers are Russia, Canada, Brazil, Nigeria, Venezuela and other oil exporters.

While US is expecting rate hike this year and UK is setting tones for rate hike in the near future. Centre banks around the world are digging deeper into their monetary pockets to try to lift economies. As a result of the easy money policy, the financial market cycle has been pulled ahead of the economic cycle in many countries. China loosened monetary policy last year. Bank of Japan made a monster bet on monetary stimulus last year. European Centre Bank didn’t disappoint the market and delivered QE package early this year. Around the same time bank of Canada did a rate cut.

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