World and Asian Markets slumped further in December, with the Hang Seng Index -3.8% (YTD -14.8%), the MSCI Asia ex Japan Index -3.4% (YTD -16.8%), the MSCI AC ASEAN Index -0.9% (YTD -11.8%), and Thai SET Index slipping -3.6% (YTD -10.8%); Knight Mekong Fund +2.2% (YTD -2.6%) and the Knight Asia Contrarian Fund +2.3% (YTD +0.6%).

Most of our expectations for 2019 were outlined in last month’s newsletter. As we enter the New Year, markets are typically continuing the December trend. However, we expect a rebound on the back of a US / China trade deal, and Federal Reserve softening of guidance.

Headwinds will remain, however, with Congress/White House friction to worsen, and Europe in flux. Trump’s Presidency remains surprisingly strong, although with few allies remaining. His effect on markets is unquestionable, most recently coercing a decline in the oil price in return for continued support for Saud.

Most likely Theresa May’s BREXIT deal will fail to pass Parliament, the EU may then give Britain a one year interim extension, during which time May will call an election, and the incoming Government call a 2nd Referendum.

Thailand looks forward to an election in February/March, and the return to some kind of civilian rule; followed by the Coronation set for 3-5 May. This should ensure that Thailand remains a relatively bright spot in emerging Asia.