Maurizio Checchi, Vicesindaco di Ascona
What is the current global macroeconomic situation?
The IMF’s global growth forecasts, despite a slight downwards revision, are stable at 3.7%, led by the USA (2.9%) and the emerging markets (5%). The recent downwards revision is due to future uncertainty caused by the trade measures announced by various countries. However, we predict that in the medium term, talks between the USA and China will bring positive results.
What has changed under the presidency of Donald Trump, and how have financial markets reacted?
Trump enacted various expansionary fiscal measures, mostly with the aim of boosting demand and therefore stimulating internal consumption. This led to a substantial rally in American shares, particularly in 2017, with small and medium-sized enterprises and the high-tech sector leading the way. At a global level, the trade war started by Trump had a negative effect on the markets in 2018, due to the future uncertainty it has caused.
Will interest rates go up in the next 12 months?
In terms of monetary policy, interest rates will continue to rise slowly in the United States, because the Fed has to tackle the increase in inflation resulting from the excellent progress achieved in the labour market (the unemployment rate stands at around 3.7%). Nevertheless, the new chairman of the Fed, Jerome Powell, has repeatedly stated that all future decisions will be taken solely and exclusively on the basis of the latest macroeconomic inflation and growth data. In Europe, however, rates will remain unchanged at least until Mario Draghi’s European Central Bank presidency ends (at the end of September 2019).
Will the Swiss Franc maintain its role as a ‘safe haven currency’?
Yes, the Swiss Franc will continue to be seen as a safe currency by the markets, thanks to its sustained growth accompanied by a low level of public debt (30%).
Will the stock markets have enough impetus to keep rising?
At global level, the fundamentals will remain secure. However, some elements of uncertainty have arisen that could lead to increased volatility compared to the past five years, with annual stock market corrections, as happened in October and December 2018. This could stem from factors like the uncertainty arising from the trade war between the USA and China, monetary policy in the United States and geopolitical risks in Europe, in view of the upcoming European elections in 2019.
What are the key mistakes to avoid when managing one’s portfolio?
In an environment marked by increased volatility, rather than worrying about mistakes, it is more important to remember the value of having a diverse portfolio strategy. This means not only making investments that are diverse geographically, but also, and most importantly, selecting investment tools (alternative investments, gold, currencies like CHF and Yen) which historically tend to have a low level of correlation with traditional categories of investment.