News and Commentary

Market Analysis is crucial for any good trader and here at Sainmaco, we would like to help traders better analyse the markets by listing out the important happenings of 2016. Using these political and economic happenings, a trader can hope to deduce the overall trend the market is going in and use it to their advantage! So here is a look at the major news of the year 2016 thus far!

1. Brexit - Just the start?

1st on the list is Brexit! The question of whether the rest of the countries will remain within the European Union has been answered, but what lies in wait for the fate of Europe? The United Kingdom has appointed its new prime minister and the silver lining seems to be the fact that the new British Prime Minister, Theresa May has signalled that she will not be invoking article 50 before the United Kingdom has its plans settled. This is however, met in disagreement by the chancellor of Germany, Angela Merkel, whom has clearly signalled that Article 50 must be triggered before Brexit talks. This being the political side, there is of course the economic side as well. The United Kingdom is a key trading partner with the rest of the Europe, especially in industries such as the automobile industry. This move to invoke article 50 too quickly will surely destabilise the economy in the United Kingdom which will be a problem for them. On the flipside, the European trading partners of the United Kingdom want an early warning of the repercussions which Article 50 will bring, hence the two opposing stances. Traders should keep a watchful eye on the continued happenings of this saga and see how it will affect the Euro and the GBP!

2. Opening of the Panama Canal locks

This is an event which probably has escaped the eyes of most traders because of its more obscure media coverage, especially in the Asian spectrum. However, make no mistake, the opening of the third set of locks of the Panama Canal signify a huge economic event for America and more importantly the world. With the opening of the Panama Canal locks, the port can expect to handle ships as much 2.6 times of the largest ones now being handled and the United States of America will be expecting more traffic to pass through the waterway. This will increase competitiveness of existing ports in New York, Galveston and Texas which can prove revitalising to the maritime trade of the United States of America!

3. One Belt One Road Project

While the actual realization of this project certainly won’t be in 2016, this project is nonetheless goes on our to-watch list because every phase of its development can mean earth-shaking changes for the world economy. The One Belt One Road Project is a developmental project comprised of two parts; the Maritime Silk Road and the Silk Road Economic Belt, the former goes on water while the latter goes on land. Both, however are aimed at promoting trade and creating a trading route to the entirety of Europe and Asia and was last mentioned in 2013 and promoted by then China Premier, Li Ke Qiang. This infrastructural initiative by China will cost around US4trillion dollars to US8 trillion dollars and perceived to be of great value to all countries involved, especially those in the Southeast Asian region. For traders, the key to watch for this is how it would affect China’s status as a superpower and how the western world, in particular, America will react; this will determine long term asset prices and even currency movements.