Potential unknown disruptive forces in 2012

While there are plenty of “known knowns” from the US presidential election to the possible contagion in Europe, investors will continue to react towards front page news. There is almost no doubt that the issues arising from Europe’s sovereign debt crisis will dominate business news over the coming months. Beyond that, we have identified several seemingly smaller but disruptive forces that may provide an already jittery market with more reason to stay cautious.

1.	Conflict with Iran – Tensions are rising after the economic sanctions were placed on Iran for its nuclear weapons programme. This could drive oil prices up and hurt an already slow global economy.
2.	North Korea’s New “Kim” – The youngest son of the late Kim Jong-Il has just taken over his father’s reign but at only 28, the world is already nervous about how he will rule this secretive and closed-off communist country with an advanced nuclear weapons programme.
3.	Iraq Civil War – While United States (US) forces have pulled out of Iraq, the new but fragile coalition government is already at risk of dissolving, creating more instability in the region.
4.	Pakistan and US alliance weakening – Keeping a balance in its relationship after recent Pakistani soldiers were accidentally killed will be critical. It is also important as its neighbouring country, India, is a US ally.
5.	Russian election – Uncertainties still remain about whether the Russian people really want Vladimir Putin to return as President as his coalition government lost its majority seats. Any shift in power could have implications for the energy sector as Russia is the largest oil producer in the world.

There seems to be a definite trend in these uncertainties – they are all political in nature. That really sums up what we believe 2012 may be all about!

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