British housing crash, e-commerce collapse: Saxo paints worst-case scenarios for 2015

An apartment block under construction behind a row of traditional properties in central London on Dec 11, 2014. A British housing crash is among the 10 extreme scenarios that could become reality next year and turn global markets upside down, Saxo Ba
An apartment block under construction behind a row of traditional properties in central London on Dec 11, 2014. A British housing crash is among the 10 extreme scenarios that could become reality next year and turn global markets upside down, Saxo Bank Group said in its annual Outrageous Predictions report. -- PHOTO: REUTERS

SINGAPORE - The British housing sector crashes, while the nation moves towards exiting from the European Union. China devalues its currency. A volcano erupts in Iceland to cause widespread environmental damage.

These are among the ten extreme scenarios that could become reality in 2015 and turn global markets upside down, Saxo Bank Group said in its annual Outrageous Predictions report on Dec 12.

In its latest set of predictions, Saxo Bank warned of a housing crash in Britain, particularly in London, as the impending Bank of England rate hike could drive property prices up by as much as 25 per cent next year.

Also in 2015, "the UK Independence Party wins 25 per cent of the national vote in Britain's general election on May 7… UKIP joins David Cemeron's Conservatives in a coalition government and callsfor the planned referendum of Britain's membership of the EU in 2017. UK government debt suffers a sharp rise in yields".

In Asia, China might just devalue its currency by 20 per cent in a bid to ease mounting deflationary pressures, while Japan could be hit by 5 per cent inflation as the Bank of Japan's loses control of the yen, Saxo forecast.

Russia also faces some potentially extreme trouble. With oil prices plunging and the economic sanctions imposed by the West, large Russian companies or the government itself may default on foreign debt.

Meanwhile, as cyber attacks on e-commerce services becomes more aggressive, "Amazon.com, the largest e-commerce retailer and dominant player in web-based services, suffers a decline of 50 per cent on the widespread fallout to the industry and also because of its overvaluation," Saxo Bank said.

Even Mother Nature may deal a wild card, the bank added, projecting that the already-active Icelandic volcano Bardarbunga could potentially erupt next year.

"The eruption shifts weather patterns and brings fears of a weak harvest across Europe, with grain prices doubling even as the volcano's fallout proves more modest than feared."