Drug prices will remain subject to regulatory and legislative changes that would be credit negative for pharmaceutical companies. Hospital consolidation will continue. And Medicaid expansion would be credit positive for health insurers.

China's central government has authorized Chinese regional and local governments (RLGs) three months earlier than usual to issue part of their annual new-money bond quota. This will allow RLGs to better plan and spread issuance over the year and invest in infrastructure to support economic growth. New-money bond issuance will likely exceed RMB3.7 trillion in 2019, well above the 2018 issuance of RMB2.2 trillion.

Ongoing trade disputes will likely have significant sector and regional impacts, including shifts to supply chains. At the same time, any imminent escalation of tariffs is less likely given the resumption of US-China trade discussions.

Higher oil prices during most of 2018 have reduced fiscal and external pressures in the short term, but weakened the impetus for fiscal reform, leaving government credit profiles exposed to future phases of lower oil prices. Geopolitical tensions will remain a key source of risk in 2019, while climbing unemployment could pose political and social risks longer term.