Here are one bank's 10 'outrageous' predictions that could shake markets in 2020

1. Chipmaker stocks collapse in 'AI Winter'

According to Saxo Bank, the microchips powering the artificial intelligence revolution could start to yield diminishing returns in 2020.

"As reality sets in on the limitations of AI the SOX Index collapses 50% with deteriorating earnings growth as investments freeze in a new AI winter," the firm wrote.

Chipmakers' growth in recent years has come from investments in everything from AI to cryptocurrency. But those gains could sputter in 2020 as actual results fail to meet investor's expectations, the bank added.

2. Stagflation rewarding value over growth stocks

"The iShares MSCCI World Value Factor ETF leaves the FANGS in the dust, outperforming them by 25%," Saxo Bank predicts.

The bank continued: "Each credit cycle has required ever lower rates and greater doses of stimulus to prevent a total seizure in the US and global financial system."

With a growing deficit and low interest rates in the US, the Federal Reserve could be forced to "super-size" its balance in the next recession, the firm said.

3. European Central Bank starts hiking rates

Saxo Bank predicts that Christine Lagarde, the new European Central Bank president, could decide to reverse the direction of monetary policy in Europe.

"She points out that maintaining negative deposit interest rates for a longer period could seriously harm the soundness of the European banking sector," Saxo Bank wrote, referring to a hypothetical scenario.

The firm added: "In order to force euro area governments, and notably Germany, to step in and to use fiscal policy to stimulate the economy, the ECB reverses its monetary policy and hikes rates on January 23, 2020."

4. Oil and gas companies outperform clean energy

"The combined forces of lower prices and investors avoiding the black energy sector have pushed the equity valuation on traditional energy companies to a 23% discount to clean energy companies," the firm said.

Saxo Bank added: "In 2020, we see the tables turning for the investment outlook as OPEC extends production cuts, unprofitable US shale outfits slow output growth and demand rises from Asia once again. And not only will the oil and gas industry be a surprising winner in 2020 — the clean energy industry will simultaneously suffer a wake-up call."

5. South Africa's currency weakens as the world cuts off credit lines

Saxo Bank predicts the exchange rate between the South African rand and the US dollar could rise from 15 rands per dollar to 20.

The South African government warned last year that the country's financial position could worsen as it continues to bail out the ESKOM, a struggling utility.

"The ESKOM fiasco may be the straw that will break the back of creditors' willingness to continue funding a country that hasn't had its financial or governance house in order for decades," the bank said.

6. President Trump introduces new tax to reduce trade deficit

The fallout from the US-China trade war could push President Trump to implement an "America First Tax" to balance the growing trade deficit, Saxo Bank predicts.

"Under the terms of this tax, the US corporate tax schedule is completely reconstructed to favour US-based production under the claimed principles of "fair and free trade," the firm wrote.

7. Sweden rolls out 'huge fiscal stimulus' to better integrate immigrants

Sweden is currently grappling with a growing group of Swedes that are unhappy with the country's approach to immigration.

"A massive and pragmatic attitude shift washes over Sweden as it gets to work to better integrate its immigrants and overstretched social services, driving a huge fiscal stimulus and steep rally in SEK," Saxo Bank predicts.

8. Democrats win the 2020 election driven by women and millennials

Democrats could win the presidency, while assuming control of both houses of congress in 2020 thanks to high turnout from women and millennials, Saxo Bank said.

"Millennials and even the oldest of "generation Z" in the US have become intensely motivated by the injustices and inequality driven by central bank asset market pumping and fears of climate change, where President Trump is the ultimate lightning rod for rebellion as a climate change denier," Saxo Bank wrote.

The swift victory could send big healthcare and pharma stocks tanking as much as 50% on regulatory concerns, the firm added.

9. Hungary leaves the European Union

Hungary joined the European Union in 2004, but the country's relationship with the bloc has splintered in recent years.

"The 15-year marriage now seems in trouble after the EU initiated an Article 7 procedure against the country, citing Hungary's – or really PM Orbán's — ever-tighter restrictions on free media, judges, academics, minorities and rights groups," Saxo Bank said.

The two sides could find it challenging to reconcile their differences next year, leading to Hungary exiting the bloc, the firm added.

10. Asia introduces a new reserve currency to shift away from the US dollar

Saxo predicts Asia could launch a digital reserve currency in an effort to alleviate its dependency on the US dollar.

"To confront a deepening trade rivalry and vulnerabilities from rising US threats to weaponise the US dollar and its control of global finances, the Asian Infrastructure Investment Bank creates a new reserve asset called the Asian Drawing Right, or ADR, with 1 ADR equivalent to 2 US dollars, making the ADR the world's largest currency unit," the firm wrote.