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Global Stock Markets: Review & Forecast



Global stock markets in year 2018 has shown a sharp decline in record-setting. Indicators of stock markets index showed this evidence, i.e, the Dow fell 5.6%, the S&P 500 was down 6.2% and the Nasdaq fell 4%. Particularly in December, the Dow and the S&P 500 continued to decline at a dreadful rate, down at respectively 8.7% and 9%. This year's Christmas Eve was the worst ever for the index. A period of extreme volatility portrayed year 2018 in the midst of a global economic slowdown, concerns about monetary policy, political dysfunction, inflation fears and worries about increased regulation of the technology sector.


Impact of stock shock was felt worldwide as indicated by the plunge of the FTSE All-World Index by 12% this year. It's the index's worst performance since the global financial crisis, and a sharp reversal from a gain of nearly 25% in 2017. The market damage was derived by several circumstances such as Brexit impact on the United Kingdom and Europe as well as the slowdown in the economy of China. Chinese trade outlook and a rapid rise in debt levels contributed to the country’s declining stock market performance.


Meanwhile, in Indonesia, the economy remains cautiously optimistic. Despite a decline of 2.54% in the overall of Indonesia’s benchmark stock index, the market capitalization of Indonesia’s stock market stood at Rp 7,023 trillion, compared with Rp 7,052 trillion a year earlier, while foreign investors sold a net Rp 50.75 trillion ($3.52 billion) in Indonesian stocks for the whole of 2018, compared with Rp 39.6 trillion in 2017.


Wimboh Santoso, chairman of the Financial Services Authority (OJK), said that OJK will provide stimulus to encourage more companies to list by offering various instruments. “We are optimistic that the JCI has a chance to rise further at a level of between 6,500 and 7,000 next year”, he said.


However, the 2019 picture may look different. According to analyst, the 2019 elections and global economic turmoil may impact on the JCI future direction, posing some risks to the Indonesian stock market. Analyst from Samuel Sekuritas Indonesia, Andy Ferdinand, saw that there are some uncertain factors to the JCI, ahead of the election. Those are social issues, security issues and economic policy that will be made by the president-elect. In the midst of global uncertainties, Ferdinand predicts that the price of several commodities will strengthen impacting positively the Indonesian stock market next year.


On the international platform, the stock market may go up before it goes down in 2019, according to Bank of America Merrill Lynch chief U.S. equity strategist Savita Subramanian. “The S&P 500 will drop to 2,900 at the end of 2019 from 3,000 at the end of this year”, according to Bank of America. Subramanian’s bearish outlook is based on several factors related to the macroeconomic landscape such as concerns of trade, geopolitics, a widening federal deficit, increased Federal Reserve tightening and an upward bias for volatility in equity markets.


Sources:

Edition CNN

CNBC

The Insider Stories

Yahoo Finance

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