Investors should be on the lookout for bouts of volatility in 2017 driven by the US dollar, oil and commodity prices, says Triple 3 Partners.
Volatility throughout 2017 is likely to be "episodic" rather than prolonged, according to Triple 3 Partners chief investment officer Simon Ho – ahead of increased volatility driven by a possible downturn in 2018.
While 2016 was not as volatile as people may have thought, there will be three main drivers of volatility in 2017, Mr Ho said.
"The first will be the US dollar. The second will be oil and commodity prices - which are intermittently linked to the movement in the dollar. The third will be interest rates and we think that the [US Federal Reserve] could be behind the curve here, resulting in a faster pace of interest rate hikes," he said.
Inflation is starting to appear throughout the world ("even in Europe") and US President Donald Trump is "pump priming" the world's largest economy.
"Any one of those three drivers could potentially cause a crack in the fabric of global economies," Mr Ho said.
"If rates surprise on the upside – and President Trump’s policies feed into that – a market downturn is inevitable for 2018.
"A depressed US market is bad news for global economies. If you look around the world, stocks globally are priced at fairly high levels, and a rapid rise in rates could see a lot of that come undone."