Predictions for 2019: Brexit and geopolitics

Experts from across the industry provide their predictions on what will be the biggest trends of the coming year.

Alasdair Haynes, founder and CEO, Aquis Exchange

I can’t imagine that the first quarter, or even the first half, of 2019 will be dominated by anything other than Brexit. Either there is going to be an escalation of the frantic rush to get everything in place for whatever type of deal has been agreed or there will be total chaos should we end up with a ‘no deal’, or even a ‘no Brexit’, scenario. In such an atmosphere, we can expect market volatility to soar as rumours, statements and counter-statements fill the void. However, taking a longer view and a more global one, I think 2019 will be a year of politics not economics.

Peter Randall, president, SETL

2019 is a year when politics will trump business. Instability between the two biggest trade blocs, China and the USA, uncertainty in the relationship between the UK and the EC, and troubling re-alignments in the near and middle East, coupled with on-going background worries about global terrorism and cyber disruption present a difficult to navigate backdrop for markets in 2019.

It is likely that most of this is already in the prices for most assets but central bank actions in response to the termination of the various quantitative easing programmes will likely reveal tighter than expected bond markets which may push up interest rates as well. Expect volatility, remember it is your friend. I expect to see markets creeping around looking for action, then bursts of frenetic adjustments followed by periods of ennui.

Curtis Ravenel, global head of sustainable business & finance, Bloomberg

ESG is likely to be a key agenda item for buy-side firms globally next year. European institutional investors are increasingly asking for greater disclosure of ESG factors, in anticipation of the introduction of new EU rules requiring investors and asset-managers to include ESG considerations in their investment decision-making process. This is beginning to have spill-over effects in the US and other jurisdictions, as European clients are asking their investment managers, regardless of location, to disclose ESG factors influencing portfolio construction.

Companies are also starting to be pressured to disclose how they are managing climate-related risks and provide more high quality ESG information, in a manner which is consistent with the recommendations of the FSB Task Force on Climate-related Financial Disclosure (TCFD), and the Sustainability Accounting Standards Board (SASB), which focus on sector-specific, financially material climate and sustainability issues.

Cécile Nagel, CEO, EuroCCP

Brexit will continue to dominate the agenda. While market participants have already invested significant resources preparing for the UK’s departure from the EU, unknowns remain. Thus far the industry has focused on the official exit date. However, 29 March will only mark the beginning of fundamental changes that will affect financial services firms throughout 2019 and beyond. I also expect regulatory change and M&A to continue to drive the agenda for market infrastructure, especially as firms look to build out their technology and broaden their products and services offering.