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(CNBC) By Matthew West - The year ahead will see slow global economic growth combined with political uncertainty to create to a similar outlook for stock markets to 2011 with a significant chance of continued stock market volatility, according to a research note published by HSBC’s global head of equity strategy, Gary Evans.
Evans said uncertainty over the euro zone would persist well into next year and that it would ultimately only come to an end when Germany was forced to change its policy over euro bonds and European Central Bank asset purchases, most likely by a political or economic crisis.
“It is our experience that, when the only decisions are tough ones, politicians delay making them until a crisis forces them to,” Evans wrote.
“One possible scenario for the next few months, then, is that a complete collapse of confidence in the euro zone finally forces the German government to save the euro by dropping its opposition to fiscal transfers and debt monetisation."
“An alternative scenario is that markets rally each time there is a prospect of a euro-solution (as they did in July and October) but give back their gains when it becomes clear that the proposed measures are feeble. Meanwhile, the global economy will be a hostage to politicians’ actions (in the US, too, in an election year) – as well as facing its own structural headwinds from deleveraging,” he added.
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