2019 global market review

2019 was an extraordinary year for investors, with virtually all asset classes rising sharply in value, as Simon Watts explains.
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Published 17 January
3 mins

2019 was an extraordinary year for investors, with virtually all asset classes rising sharply in value. In our view, investors entered the year with trepidation having just experienced a volatile and loss-making end to 2018.

There seemed to be four main worries:

  • Slowing global growth
  • Rising interest rates
  • US – China trade tensions
  • Brexit

December 2018 proved to be a low point as confidence recovered, helped by central banks reversing their direction of travel. Brexit concerns as Theresa May found it impossible to win Parliamentary approval for her EU withdrawal agreement, and MPs forced her into a career ending extension in order to avoid an economically damaging ‘no-deal Brexit’.


Although far from a smooth line, relations between the US and China began to improve, and by the end of year, trade talks had progressed sufficiently for Trump to commit himself to signing ‘phase one’ of a trade deal. Finally, although growth slowed, by the end of the year the outlook had stabilised and any lingering talk about an impending recession had faded away.

Equity markets rallied sharply, with the MSCI AC World Index returning +26.6% measured in US dollars. Among the majors:

  • US (+30.9%) yet again the star performer
  • UK (+21.0%)
  • Japan (+19.6%)
  • Emerging Markets (+18.4%)

At the sector level, information technology (+47.5%) led the way, while utilities (+22.2%), materials (+20.5%) and energy (+13.8%) underperformed. In terms of style, Growth (+33.1%) significantly outperformed value stocks (+21.4%), while there was little to separate higher risk smaller companies (+25.2%) and larger companies (+26.6%).


Within fixed income, corporate bonds (especially high yield) outshone safe haven government bonds. Over the period, the JP Morgan Government Bond Index rose +7.6%, while the ICE Merrill Lynch Global Investment Grade Corporate Bond Index delivered +12.5%. The rally in equity markets allied with strong risk appetite saw emerging market bonds and high yield outperforming government bonds, as the JP Morgan Emerging Market Bond Index delivered +14.4% and the ICE Merrill Lynch Global High Yield Bond Index rose +14.5%.


The Bloomberg Commodities Index rose +7.7%, although this masked significant divergence across underlying sub-sectors. Crude oil (+34.4%) was one of the strongest areas after OPEC agreed to further production cuts. Gold (+18.0%) was also well supported, in part reflecting the decline in US interest rates. In contrast, agriculture (+1.7%) was relatively weak as a result of excessive supply, especially in corn (-5.2%).

The US Dollar was mixed over the year, with interest rate cuts by the US Federal Reserve acting as a partial headwind. Among the majors, the US Dollar rose against the Euro (+2.3%), while it lost ground against the Yen (-1.0%) and Sterling (-3.8%). Sterling rallied on the back of reduced uncertainty regarding Brexit and the risk of a Corbyn-led government. The US Dollar was also mixed against emerging market currencies, rising against the Brazilian Real (+3.5%) and Turkish Lira (+12.5%), but falling against the South African Rand (-2.8%) and the Mexican Peso (-4.0%).

Finally, although growth slowed, by the end of the year the outlook had stabilised, and any lingering talk about an impending recession had faded away. 

2020 global outlook

Each December our International Strategy Committee convenes to discuss and agree our base case scenario investment outlook for the following year. Below are the main points that best describe investment prospects for 2020:
  1. 2020 global real GDP growth will be positive but moderate, lying in the range of 2-3%. International trade and manufacturing growth should stabilise and start to pick up as 2020 progresses.
  2. US/China trade tensions will ease with the passing of ‘phase one’ of a trade deal. It is in both sides interests to de-escalate this issue – Trump faces an election, while Xi needs better Chinese economic growth.
  3. Advanced economy core inflation will remain suppressed around current levels, which should allow central banks to maintain low interest rates.
  4. Following little growth in 2019, global corporate earnings will increase by around 5% in 2020 (measured in US$ terms).
  5. Equities will outperform bonds because they offer better starting valuations – the equity/bond risk premium continues to favour equities.
  6. Many of the better value non-US equity markets (e.g. UK, EM, Japan, Asia, Europe) will outperform the more expensive US (currency hedged).
  7. Advanced economy bond curves will steepen, although levels will remain in a low absolute range, anchored by central bank policy rates.
  8. US treasuries will outperform European and Japanese government bonds (currency hedged).
  9. Emerging market debt will outperform advanced economy sovereign bonds, helped by higher real yields and currency appreciation.
  10. Investment grade credit and better quality high yield debt will modestly outperform government bonds.
  11. The UK will leave the EU in early 2020. Brexit uncertainty will then transfer to 31/12/20 – a ‘hard Brexit’ remains a possibility if no trade deal or transition extension can be agreed – sterling stays range bound.
  12. Investor returns will be modest over the next 12 months, while volatility is likely to rise.

Clearly, 2019 has been a very good year for investment returns, with strong gains seen in both the first and second halves of the year. As a result, relatively demanding asset class valuations mean it is unlikely that 2020 will be as generous to investors.

Notes: All data is quoted in US Dollar terms unless otherwise stated.

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how we manage your portfolio across market cycles, or call +44 (0)1624 645000 to speak to our client services team.


If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above, or get in touch via the forms linked towards the end of the page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’
portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.

about the author

Simon Watts

Simon Watts

Based in the London office, Simon joined in 2012 as a senior investment analyst, focusing primarily on fund research and portfolio management. Simon has 20 years of industry experience and is a Chartered Financial Analyst.


Prior to joining the firm, Simon worked as a senior investment analyst at XL Group, a global insurance and reinsurance company, within its investment management division. Further experience includes working at UBS Investment Bank within their economic research department as an economist and strategist, focusing on emerging European markets.

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