Looking back: Key events that impacted markets and global economy in 2015

Fromeconomicpolicytostockmarketmovesandmergers,changesinthecorporatelandscapetookplaceatabreathlesspacethisyear.AaronLowlooksbackatsomeofthekeyeventsinfinancialmarketsandtheglobaleconomythatmade2015amomentousyearformarketsaroundtheworld.

1BLACKGOLDLOSESITSSHINE

Oilsufferedoneofitsworstyearsinthepastdecade,asacombinationofsevereover-capacityandweakdemandforcedoilpricestotheirlowestlevelssincethefinancialcrisis.

BrentcrudefelltobelowUS$35lastweek,theweakestlevelinsixyears.Overthepast18monthsalone,oilpriceshavefallenover50percent.

Theoutlookremainsmurkyforthecommodity,alsoknownasblackgold,withGoldmanSachspredictingthatitcouldhitUS$20abarrel.Abigfactorinthecurrentweaknessinoilpriceshasbeenthedecisionbytheoilcartel,theOrganisationofthePetroleumExportingCountries(Opec),tocontinuepumpingwellabovetheusualconsumptionlevels.

GoldmanSachsestimatesthatthe13membersarecurrentlyproducing32millionbarrelsperday,abovethe30millionbarrelsadaylevelpreviouslyagreedbyOpec.

ThedecisiontoproducemoreoilcameasAmericanproducerscouldextractoilfromshalereservesataboutUS$60abarrel.

Hence,thecurrentstrategyusedbyOpec,engineeredbySaudiArabia,isaimedatkeepingmarketshareforOpecandforcingUSproducersoutaltogether.

2BLOCKBUSTERACQUISITIONS

Whilepublicmarketswereinturmoil,privatedealmakerswerebusyonthesidelinesmakingsomeofthebiggestmergersandacquisitionsincorporatehistory.

AccordingtomarketinformationservicesproviderDealogic,2015issettobethebiggestyearforbuyoutsever,withabout37,431dealsworthUS$4.75trillion(S$6.7trillion)sewnup.ThebiggestwaspharmagiantPfizer'sUS$160billionacquisitionofAllergan.ThedealwasstrucktohelpPfizercutitstaxloadthroughaprocesscalled"taxinversion"-gettingitscompanyreincorpratedinacountrywithlowertaxes.

AnothergiganticdealwastheUS$130billionall-stockmergerbetweenchemicalgiantsDuPontandDowChemical.Dubbed"thedealofthreecenturies"byWellsFargoanalystFrankMitsch,themergerwasoneofseveralinawaveofconsolidationacrosstheindustryprecipitatedbyfallingdemandandweakercommodityprices.

Behindthedeals,bankersprofitedimmenselyfromthesurgeinmergersandacquisitionsthisyear.

3CONNECTINGTHETRADEDOTS

Theglobaleconomymaybeinafunk,withChinalookingfragileandEuropeunabletogetitsacttogether,butthegloomyoutlookhasnotstoppedpolicymakersfromconcludingmajortradepactsthisyear.

AtthetopofthelististheambitiousTrans-PacificPartnership,afreetradedealinkedinOctoberafteryearsofnegotiations.

LedbytheUnitedStates,thedealwilllink12countriesacrossthreecontinentsinapactthatcoversgoods,servicesandinvestments.

Thedealneedstobeendorsedbythegovernmentofeachparticipatingcountrybutanalystsarealreadypredictingpositiveimpacts.

Forone,thedealwillchangetherulesofthegamefortradeandinnovation,notedHSBC.

"DevelopingcountrieslikeChile,Malaysia,PeruorVietnamgainaccesstoalargepoolofinnovationviaopenmarkets,promotingtechnologytransfer.DevelopedcountriesliketheUSandJapanwillbeabletomarketeachinnovativeproducttomorecustomers,"itsaid.

Nottobeoutdone,Chinaalsomadebigmovesonthetradefront,pitchinganewdevelopmentbanktorivaltheInternationalMonetaryFundandtheAsianDevelopmentBank.TheAsianInfrastructureInvestmentBank(AIIB)aimstoinvestinandfacilitateinfrastructureprojectsinthispartoftheworld.

4NOBLECOMESUNDERATTACK

CEO Yusuf Alireza has repeatedly stressed that Noble has more than enough liquidity to service the commodity firm’s short-term debt. PHOTO: BLOOMBERG

InSeptember,theUSEnvironmentalProtectionAgencyfoundmanyVolkswagencarshadadevicewhichcoulddetectwhentheywerebeingtested,andchangetheirperformancetoimproveresults.

Whatmadethescandalevenworsewasthisdevicewasimplantedwithspecialsoftwaredesignedspecificallytocheatteststandards.

Sincethen,theGermancarmaker,whichhasbeenonadrivetoselldieselenginecars,hasadmittedtocheatinginUSemissionstests.

Thestormlatergrewglobal,asVolkswagen,theworld'ssecond-biggestcarmaker,alsosaidabout11millioncarsworldwide,includingeightmillioninEurope,arefittedwiththisso-called"defeatdevice".

Theimpactofthecheatingscandalonthecompanywasimmediate,withthefirm'sreputationtakingahugehit."We'vetotallyscrewedup,"saidVolkswagen'sUSbossMichaelHorn.

Thecompany'sgroupchiefexecutiveatthetime,MrMartinWinterkorn,saidhiscompanyhad"brokenthetrustofourcustomersandthepublic".MrWinterkornlatersteppeddown,tobereplacedbyMrMatthiasMueller,butthathasnothelpedthecompanyregainitslostreputation.

Therewasalsoahugefinancialcosttothecompany.Ithassetaside€6.7billion(S$10.3billion)tocovercosts,whichresultedinthecompanypostingitsfirstquarterlylossin15yearsof€2.5billioninlateOctober.

What'smore,analystsareincreasinglyquestioningtheentiredieselengineindustry,arguingthatthewholepremiseoftheindustryisahoaxtobeginwith.

Fornow,though,somecompaniesarebenefitingfromVolkswagen'sproblems.

JapanesecarmakerToyotahascementeditspositionastheworld'sbiggestcarmaker,afterseeingitssalesjumpfollowingthescandal.

5 FRENCH FIRM BUYS NOL

After months of speculation, Neptune Orient Lines (NOL) was finally shipped off to a larger rival as the industry is buffeted by fierce competition and weak demand.

The buyer is CMA CGM, the world's third largest shipping liner, which is offering $1.30 a share, valuing NOL at about $3.4 billion.

Temasek Holdings, which holds 67 per cent of NOL, has agreed to sell its entire stake to CMA CGM.

The combined entity will cement CMA CGM in third place as other rivals in the industry also continue to consolidate.

NOL became a Singapore icon after it was set up in 1968 by the Government to boost maritime trade to the island's ports.

Over the years, it grew its fleet from a handful of ships to become a global shipping line that, at one point, challenged the industry's biggest companies.

But, plagued by overcapacity and falling demand, a wave of consolidation took place in the industry and NOL was caught swimming against the tide. It never managed to recover, following a dip in fortunes after the financial crisis.

The shipping firm, in the red for the past four years, had embarked on a series of cost-cutting exercises to stem its losses, but to no avail.

It has sold off its building in Alexandra Road as well as its logistics business to raise funds. But the company kept burning through cash, with no end in sight - until November last year, when CMA CGM first approached NOL about the possibility of a takeover.

6 EMISSIONS SCANDAL ENGULFS VOLKSWAGEN

(Volkswagen, which has been on a drive to sell cars with diesel engines (above), admitted to cheating in US emissions tests.PHOTO: BLOOMBERG)

In September, the US Environmental Protection Agency found many Volkswagen cars had a device which could detect when they were being tested, and change their performance to improve results.

What made the scandal even worse was this device was implanted with special software designed specifically to cheat test standards.

Since then, the German carmaker, which has been on a drive to sell diesel engine cars, has admitted to cheating in US emissions tests.

The storm later grew global, as Volkswagen, the world's second-biggest carmaker, also said about 11 million cars worldwide, including eight million in Europe, are fitted with this so-called "defeat device".

The impact of the cheating scandal on the company was immediate, with the firm's reputation taking a huge hit. "We've totally screwed up," said Volkswagen's US boss Michael Horn.

The company's group chief executive at the time, Mr Martin Winterkorn, said his company had "broken the trust of our customers and the public". Mr Winterkorn later stepped down, to be replaced by Mr Matthias Mueller, but that has not helped the company regain its lost reputation.

There was also a huge financial cost to the company. It has set aside €6.7 billion (S$10.3 billion) to cover costs, which resulted in the company posting its first quarterly loss in 15 years of €2.5 billion in late October.

7MASSIVELAY-OFFSINBANKINGINDUSTRY.

( Major EU and US banks, including Standard Chartered, Rabobank and JP Morgan, have shed about 100,000 jobs.PHOTO: AGENCE FRANCE-PRESSE)

Fallingprofitsandregulatoryscrutinymeantthebankingindustrysufferedanotherwaveoflay-offs.

TheworsthitweremajorbanksinEuropeandtheUnitedStates,whichhaveshedcloseto100,000jobsthisyear,accordingtoreports.

Someofthebiggestnamesintheindustryhavebeenaffected,includingHSBCBank,StandardChartered,RabobankandJPMorgan.

BarclaysimposedahiringfreezeinSeptemberafterannouncingthatitwillslash19,000jobsacrossthegroup,including7,000initsinvestmentbank.

OtherslikeUnicredit,Italy'slargestbankbyassets,saidtheywillshed18,000jobsby2018.

AbigpartoftheirmountingwoesarethemuchstricterregulationsarisingfromthefinancialcrisiswroughtbytheUSsub-primecollapsein2008.

RegulationslikeBaselIIImakeitarequirementforbankstoraisecapital.

Coupledwithlowinterestrates,manylenderscontinuetosuffer.

Anotherreasonisweakereconomicgrowththathastranslatedintopoorinvestmentsentiment.

Usualmoneyspinnerssuchascompanies'listingsonsharemarketshavebeenweakthisyear,withmoremoneygoingintoprivateequitydeals.ns.