In its look ahead to 2020, private banking giant UBS suggests an uneasy time and a “year of choices”.

According to the firm, 79% of investors foresee a period of higher volatility. In Switzerland, this is as high as 84%. Furthermore, 55% predict there will be a drop in the markets before 2020 and 52% of investors are unsure if this is a good time to invest.

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The worries continue as 72% of investors feel the environment is more challenging than five years ago. Also, 58% now believe that investment returns are now out of their control.

Geopolitical events are described as a major driver or the markets. Two-thirds (66%) of investors believe that geopolitical events drive the markets more than business fundamentals.

The top geopolitical concerns are:

  • US-China trade conflict (44%);
  • Political environment in my market (41%), and
  • 2020 US Presidential election (37%).

Globally, 82% of investors wish to get advice on the US Presidential election. This jumps up to 92% in Latin America and 84% in Asia.

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Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “Elections, trade tensions and a shifting monetary and fiscal policy mix are likely to define a ‘year of choices’ in 2020. However, investors should also look beyond the next 12 months to a ‘decade of transformation’ where new winners and losers could change how investors allocate capital.”

UBS Global Wealth Mangement’s (GWM) core recommendations for 2020 are:

  • quality and dividend-paying stocks, as well as domestic and consumer-focused firms that are less exposed to trade and business spending;
  • a middle-of-the-road approach to bonds, given very low yields on the safest debt and rising credit risks among high-yield issuers, and
  • a preference for: precious metals over cyclical commodities; a combination of safe and high-yielding currencies; for low sensitivity to market movements within alternative investments.

UBS 2020 base outlook

In UBS GWM’s base case, the global economy will grow 3% in 2020. This is a slight decrease from the 3.1% in 2019, according to the firm’s outlook. Developed market growth will decelerate from 1.6% to 1.1%, while emerging market growth will accelerate from 4.2% to 4.6%.