US Equities Make New Record Highs Despite Global Risks

Global Economics and Markets Newsletter November 2019

Family Consulting provides an overview of the months most important financial market and global macroeconomic events that may affect private business and family office decisions.

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This newsletter explains the following topics;

・This Month’s Big Themes

One side effect of the trade war has been a substantial drop in cross-border direct investment, also known as foreign direct investment (FDI). According to recent OECD data, the global volume of FDI fell 20% in the first half of 2019 versus the last 6 months of 2018. This decline accelerated in the second quarter when global FDI was down 42% from the same period a year earlier after a decline of 5% in Q1. In the first half of 2019, inbound FDI into the US fell 25% from a year earlier, FDI into the EU fell, while FDI into China increased by 5%. Notably, FDI from China to the US fell more than 90% over the last three years. That decline comes as higher tariffs have caused bilateral trade between the US and China to decline by about 10% in the past year. It’s not only the US-China trade dispute that has had a negative impact on global cross border investment, Brexit uncertainty has played a role as well. The OECD reports that inbound FDI into the UK fell by more than 50% in the first half of 2019 versus a year earlier. This follows a decline of 33% in the previous year. Evidently companies that previously looked to the UK as a gateway to Europe are looking elsewhere. While the overall decline in global flows of FDI likely results from trade restrictions and uncertainty, other factors likely played a role. These include investor pessimism about the state of the global economy, the evident slowdown in global growth, and the possibility of a recession in the next year.

・Country Updates 

▶ Japan
▶ United States
▶ China
▶ Hong Kong
▶ Eurozone
▶ United Kingdom

・Capital Markets

(332KB, PDF)

* This Article is based on the relevant Japanese or specific country’s tax law and other authorities in effect on the date of this Article. This Article would not be guaranteed updating if there are any changes in Japanese tax law, any other law, or interpretations by the courts or tax authorities thereof after the date of this Article.

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