Unhappy new year
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People and MarketsCommentLeader

Unhappy new year

If bankers had to put one thing on their Christmas lists it would have been a new year free of disruptions. But it looks like Santa Claus was paying attention to all those conduct fines. One week in and we’re off to a stinker.

Another Chinese stock shock, limp dealflow, a BES mess in Portugal, a trading scandal in the SSA bond market and that old favourite, tensions in the Middle East, put paid to any lingering festive high spirits. Things may not get much better.

Portuguese presidential elections are coming up and the second half of the year offers much murk.

A US presidential election is always a big event, and this time, with Donald Trump making George W Bush look sober and managerial, the risk of volatility is much higher than usual.

The UK’s referendum on EU membership, likely this year, is another cause of market anxiety. As the Scottish independence vote showed, the nearer these things get, the tighter they can become.

The Syrian conflict shows no sign of resolution. And now two key players in the region, Saudi Arabia and Iran, are toe-to-toe.

The influx of refugees to Europe is unlikely to slow, posing the worst challenge yet to EU unity.

Even without counting the anti-foreigner rhetoric now coming from countries such as Poland, Hungary and the Czech Republic, there is plenty to worry about in western Europe.

In Spain, both radical left party Podemos and Ciudadanos are likely to shake up Spain’s political scene. Catalonia’s government remains on a collision course with Madrid, determined to secede.

Further reforms in Greece could also prove disruptive.

All that is spice on a dish of likely rate hikes in the US and UK — something that never goes down well in bond markets.

There have been notable deals thus far — a couple of decent looking SSA deals, borrowers which rely on January as a key month for funding, and a barnstormer from Daimler in the corporate market.

Perhaps these are the glimmers of hope that should attract tin-hatted borrowers to markets now sooner than later.

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