RBS Predicts Stockmarket Crash in 2016

RBS Predicts Stockmarket Crash in 2016.

The Royal Bank of Scotland (RBS) has issued the equivalent of our "red alert" by suggesting to investors that there is a possibility of a 20% fall in stock markets across the globe in 2016. A fall of 20% or more is categorised as a "crash". RBS has suggested that investors "sell everything".

Oil prices are low at below $30 per barrel and are expected to fall to around $20 per barrel quite quickly and possibly even $10 per barrel by the end of the year as one leading bank has suggested. In addition, China government debt is rising and whilst the Chinese economy is not directly correlated with the Western economies, there are still close enough links for the second largest economy on the planet to cause waves for the rest of the world should its debt bubble burst in the midst of economic slowdown.

Comment

It's a funny old world. The International Monetary Fund (IMF) said that for the UK and the US despite our economy is growing in 2016 we could see extreme volatility in stock markets given any drag from China.

For equities in 2016 we expect continued volatility, initially with significant market falls and then a period of instability before markets recover later this year. That said we can only predict single digit returns for stockmarkets in 2016.