The wealth report by Knight Frank states that in early 2019, many of the trends that shaped the global economy in 2018 – from Brexit to trade wars to financial market volatility – appear l to be prevalent.
The wealth report highlights four trends that could move to the forefront.
Recession scares
Some believe that a major economic downturn occurs every ten years or so, which – given that in many countries the last recession occurred in 2008/09 – would make the next one imminent.
In 2018, we saw a number of assets with inflated values correct, such as cryptocurrencies, technology shares and house prices in certain global cities. While some repricing has already occurred, leading to speculation that recession is looming, there could be opportunities for investors willing to take a long-term view. UK assets, for instance, have perhaps accumulated too much Brexit discount.
Leaderless populism
In recent years, we have seen the rise of populist movements under charismatic leaders but the emergence of groundswell movements without formal structure is a new phenomenon.
If this marks the beginning of a new phase of populism, ultra HNIs may well start to show a preference towards investing in places with less of a tradition of street protest. This could perhaps favour the so-called “S-for-stability” locations, such as Singapore, Scandinavia and Switzerland.
The new Vikings
The UK’s departure from the EU is already affecting the internal politics of the trade bloc.
This more prominent role on the diplomatic stage could draw investor attention to the small but wealthy nations of the North Sea and Baltic coastlines. The UK has traditionally appealed to ultra HNIs seeking a country with liberal values, political stability and safe haven qualities. The Netherlands, Denmark, Sweden and Finland share these characteristics and offer growing exposure to Europe’s tech start-up scene.
New energy politics
For decades, the politics of the Middle East is keenly monitored around the world because of its impact on oil prices. BP in its most recent Energy Outlook report has predicted that most future growth in energy demand will be for gas and electricity, reflecting our ever-increasing reliance on battery power and prompting The Economist to hail the end of the era of the internal combustion engine. Ultra HNIs must consider the geopolitical implications.