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6 key events that could shape markets in the second half of 2017

Our Blog Jul 03, 2017
Columbia Threadneedle Investment Team

The first half of the year may have provided some stability for investors around the world. But while the rest of the year holds plenty of opportunities, some key events could cause uncertainty and even volatility.

The opening months of 2017 brought some relief to the markets when mainstream candidates won two important elections in the Netherlands and France. But the sense of stability did not last long. In a surprise U.K. election held June 8, the ruling Conservative Party lost its majority in Parliament. And this has seeded fresh doubts about Britain’s political stability, raising important questions on how it will navigate the complex process of negotiating Brexit.

The future of the U.K. isn’t the only issue that could cause uncertainty between now and 2018. There are six other upcoming events that advisors and investors should keep an eye on for potential risks and opportunities.

July 7: G20 summit

July 7: G20 summitLeaders from the world’s 20 most powerful economies will gather in Hamburg, Germany to discuss many issues including the Syrian war, international trade and military spending, to name a few. This will be the first G20 meeting for President Trump and could come with its own challenges given the President’s current relationship with European allies. It’s also possible that the first public meeting between Trump and Russian President Vladimir Putin will take place at the summit, which will likely elicit global attention.

 

 

 

Aug. 6: Iranian presidential inauguration

Aug. 6: Iranian presidential inaugurationThe moderate Hassan Rouhani secured a second term as president of Iran in the May elections. His most significant first-term success was securing the nuclear deal with the U.S. and five other world powers, removing many international sanctions against Iran. During his second term, he’ll most likely attempt to secure greater international investments for the Iranian economy, but tensions with Gulf neighbors and the U.S. could make that difficult.

 

 

 

Sept. 24: German elections

Sept. 24: German electionsGerman Chancellor Angela Merkel is the dominant political force in European politics, and her Christian Democratic Union party is expected to secure another win during Bundestag elections. Any sign of her position being under threat as polling day nears is bound to rattle nerves around Europe and beyond.

 

 

 

 

Oct. 1: Independence referendum for the Spanish province of Catalonia

Oct. 1: Independence referendum for the Spanish province of CataloniaLocals in Catalonia — the northeast corner of Spain, which includes Barcelona, the capital and second-largest city — have been pushing for independence from Madrid for decades. A vote could take place in a referendum proposed for October 1. The country’s political establishment will argue vociferously against any move toward secession because a victory for the Catalans could possibly encourage other parts of the country to break away.

 

 

 

Autumn: Chinese National Congress

Autumn: Chinese National CongressThe 19th National Congress of the Chinese Communist Party is set to be held in Beijing this fall, and it’s an occasion where significant changes could happen in the upper echelons of the ruling party. Such decisions may help determine the future direction of the world’s second-largest economy, resulting in consequences for companies and investors the world over.

 

 

 

 

Dec 11: World Trade Organization ministerial conference

Dec 11: World Trade Organization ministerial conferenceHeld once every two years, the WTO’s ministerial conference is the trade organization’s top decision-making body. Previous conferences have resulted in the launch of major multilateral trade negotiations and the accession of new member states. The 11th biennial meeting will be held in Buenos Aires, Argentina.

Besides these major events, there are many other areas worth keeping a close eye on. Italy is not required to hold a general election until May 2018, but there is plenty of speculation that one could be called before the end of the year. There’s a lot at stake, particularly the performance of Italy’s populist, anti-European Five Star Movement, which has been doing well in opinion polls. The U.K. might also have another general election in 2017 if the government proves unstable.

A new country could begin to emerge in the Middle East before the year is over. There’s a growing push for an independence referendum in the Kurdistan region of northern Iraq, and it’s likely to be held September 25. Because Kurdistan holds a significant portion of Iraq’s oil resources, the federal government in Baghdad is unlikely to acquiesce in a formal separation of the country. Unless the situation is carefully managed by both Iraqi authorities and international powers, it could set off a dangerous new dispute in the region.

Finally, a wide-ranging investigation into Brazilian corporate and political corruption — known as Operation Car Wash — has the potential to lead to more high-profile resignations and arrests.

 

Bottom line

The political environment around the world is unpredictable, and the consequences of major events are hard to forecast with any confidence. But being informed of the what-ifs and the range of possible outcomes will at least help advisors and investors better prepare for the unexpected.

Tagged with: Economy and Markets