Global markets have fared surprisingly well in a year marked by major political shocks, including June's Brexit vote and the unexpected election of Donald Trump as U.S. president in November. And as Sonia Legg reports, U.S. stocks have hit successive record highs and emerging equities have rebounded 8 percent after three years in the red.
Who'd have thought it - Britain's blue chip FTSE 100 closed the year at a record high. It's more than 23 percent above the values seen after the Brexit vote in June, although divorce from the EU may still pose problems. (SOUNDBITE) (English) Senior EM FUND MANAGER FOR SOMERSET CAPITAL, EDWARD LAM SAYING: "Negotiating those bilateral trade agreements is going to be a lot tougher than those that are positive on Brexit think and it looks like it will end being a bit of a compromise." Global markets have also fared surprisingly well in a year when the U.S. election provided an even bigger shock. World stocks were up nearly 6 percent despite concerns over China's slowing growth and weakening currency. (SOUNDBITE) (English) Senior EM FUND MANAGER FOR SOMERSET CAPITAL, EDWARD LAM SAYING: "If you look at markets like Brazil or like Hungary or Russia they've made adjustments in their current account deficits and in their fiscal balances. The other positive from China is that there's been a large amount of capital outflows and that's actually positive for global markets in general." Oil has been the star of 2016. Brent crude futures have bounced more than 50 percent after three years of losses. Other commodities have rallied too, with zinc, steel and rubber posting annual gains of around 60 percent. According to Schroders, government bonds were the only major asset class not to deliver positive returns. Even rising interest rates isn't ruining the party. (SOUNDBITE) (English) Senior EM FUND MANAGER FOR SOMERSET CAPITAL, EDWARD LAM SAYING: "Fundamentally we think that that's going to be positive for markets in general basically because interest rates only rise when fundementals are stronger." But political risks in Europe could upset the apple cart. There are elections in France and Germany and an ongoing banking crisis in Italy.