2016 was an unpredictable year in most of the world. From a rocky presidential election in the U.S. to the surprising Brexit in Europe result and financial and social turmoil in many parts of the world, the markets were in constant flux. 2017 hopes to bring more stability, but much of the future is still unknown. Take advantage of a fresh start with these five predictions for what the next year will bring for the stock market.
1. Tech companies will put antitrust regulation to the test.
President Trump is expected to be more corporation-friendly than President Obama, which could be good news for companies looking to merge. Sprint and T-Mobile shares jumped the day after the election in hopes that the new president will be more accepting of their merger.
There are also other potential mergers and acquisitions in the works featuring big tech names, including a possible Google bid for Yelp, Broadcom potentially acquiring Skyworks or Qorvo, or other cloud and internet providers hoping to join forces. If the antitrust regulations are indeed softened, these companies could form mega-corporations, which could be a boost to their shares and the market as a whole.
2. Social media grows and then stalls.
Snapchat had a great year in 2016, with increased user and revenue growth, as well as the successful launch of its video-recording sunglasses, Spectacles. Snapchat is expected to go public in early 2017, which could lead to successful growth and added bonuses for the company.
However, many experts are predicting that the growth won’t last forever. Facebook, which has been facing increasing concerns about its ad growth, could step in to block its competitor with its use of Instagram. Other social networking sites like Twitter are also expected to see stalled growth as users find ways around ads, the sites’ main source of revenue.
3. Increased growth in China.
The Chinese economy has faced a relative slowdown in recent years, but experts expect that to turn around in 2017 as the country builds long-term growth plans. In good news for U.S. buyers, the Chinese market is growing increasingly liquid for foreign investors, which means overall costs are going down, but many stocks are on the rise.
The Chinese market also has a large impact on interest rates, commodity markets, and energy, which means its success could have a large effect on global GDP growth.
4. Growth for U.S. manufacturing productivity.
Donald Trump has promised to increase jobs in the U.S. by pouring money into infrastructure and manufacturing. If that campaign promise holds true, the U.S. could become a serious exporter of a number of goods. U.S. productivity as measured by output per worker has slowed in recent quarters, but rates could increase dramatically in 2017.
If that is the case, however, the result on the stock market could move in either direction. Some experts see increased productivity as a boon to U.S. companies, which could help the U.S. compete with foreign producers on the global stage, while other experts believe increased productivity could lead to inflation and be disastrous for stocks. The results of the productivity surge are likely easier to predict after Trump takes office.
5. Emerging markets will thrive.
According to most industry experts, there are still a few years of strong growth in emerging markets before the run-up ends. Foreign emerging markets have grown in recent years and should continue to do so in 2017. As investors pour money into emerging markets, it perpetuates success and helps stocks continue to grow as companies have more money to manufacture and expand.
The MSCI emerging markets index is up 6.7%, and the narrower MSCI Latin America index is up 25%. However, investors are encouraged to look for emerging market stocks and plans with lower expenses, as the growth can lead investment firms to jack up their annual rates.
Investors around the world hope 2017 is a more stable financial year, and most signs point to that happening. Pay attention to the market and be ready to jump on the next big thing to see great success no matter where you invest.