While global markets are experiencing continuous growth throughout 2019, this is predicted to taper off in the near future. The coming year will be very important in setting the market tone, whether the market will remain a bull trend or usher in a turning point.
Entering the new year, global debt has reached new heights while the US General Election would usher in a cloud of uncertainty across global markets.
Toby Wu, analyst for social investment platform eToro noted that after many large central bank water releases, the global economy will generate resistance to liquidity injections. He cites Japan’s current weak QE policy. The marginal effect of interest rate cuts and loose monetary policies are also declining.
Have you read “eToroX expands offering with more stablecoins”?
However, certain areas are predicted to grow even more despite the potential for risk in 2020 like technology companies, particularly those in the semiconductor sector such as Intel, AMD, Micron, NXPI, and Skyworks. This growth is largely led by the demand for higher computing power and telecommunications updates on the road to 5G. Recently, AMD’s stocks have been declared by many analysts as some of the best performing this year, following the excellent reception of its latest processor line.
Fintech is also a sector that is predicted to grow next year particularly in the area of Decentralized Finance or DeFi. In commodities trading, gold will continue to flourish.
“Recent trends show that gold has managed to hold up even when the dollar has strengthened. This could mean that investors do see a potential slowdown in the global economy and are happy to hold gold in their portfolios,” said Wu.
Mitigating risk in trade
According to Wu, the best way to hedge risk when trading is by diversifying one’s investment portfolio.
“As an investor, adding safe-haven assets and increasing defensiveness is a good call, especially in the face of the Gray Rhino in the global economy,” he said.
He said that for aspiring traders, eToro’s community of more than 12 million multi-asset traders spanning different global markets provides them with a transparent view of the movements in different markets from stocks to crypto assets.
Aimed at leveling the playing field when it comes to trading, eToro’s News Feed and Copy Trading features allow them to learn from or impart knowledge to other traders in the platform. Furthermore, traders have the ability to see profiles of other more experienced traders and understand how they diversify their portfolios or what trading strategies they adopt.
“For the first time, everyone has the opportunity to invest in financial markets and at least have the ability to take control of their financial future,” said Wu.