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Market Outlook 2022
The global economy: Getting back in shape
We believe that economic expansion will continue in 2022, with most dislocations being worked out of the system. In our Market Outlook 2022, we explore these and other key developments to watch for.
These are our main topics for 2022:
The big picture: Getting back in shape
In 2022, we will continue to see economic expansion, but in a more self-sustained manner. Inflation will remain elevated, but we think it is mostly transitory. We are likely to see an end to the ultra-loose monetary policy seen during the Covid-19 crisis. We consider the loss of central bank guidance and policy errors as the biggest risks for financial markets. We remain invested and, from a top-down view, prefer equities as an asset class. Within equities, we are focusing on IT, healthcare, and financials – and also adding small cap stocks. In developed markets, we favour US, Swiss, French, and Italian stocks. In emerging markets, we are focusing on Chinese A-shares and India.
Fixed income: The race for yield
With central banks moving away from overly loose monetary policy, moderate credit risk still offers the best risk-return ratio. However, lower overall policy support will be a challenge for some bond issuers, so a sound bottom-up analysis to select the right issuers will be even more crucial. We expect volatility in fixed income markets to remain one of the key topics. Flexible fixed income strategies should do well, and we like fixed income alternatives in a world where yield is lacking. Meanwhile, emerging markets continue to diverge; look for gems in Asia and the Middle East.
Equities: The post-pandemic normal
2021 will go down in history as one of the most successful years for developed-market equities, as the gradual recovery from the pandemic has pushed financial markets higher. In 2022, we will focus on companies that should thrive in the post-pandemic world and will look for them from three different angles: 1) companies that will continue to perform well after the initial rebound; 2) companies that will successfully navigate the transitory inflation spike and supply constraints; and 3) companies that will benefit from the trends amplified by the pandemic.
Next Generation: Cloud Computing & Artificial Intelligence
The digitalisation trend has accelerated during the pandemic, and there is room for so much more growth, especially when it comes to cloud computing and artificial intelligence. The investment opportunities here are vast, and the structural growth backdrop provides solid footing for the investment case. Some of the companies that embody these themes can be found in our Next Generation universe.
Spotlight on: Accelerating the energy transition
While the road to net-zero emissions remains top of mind in 2022, we look at it from various angles and focus on the most attractive areas.
With inflation still at the top of investors’ minds, we take a closer look at two wild cards in our Market Outlook 2022:
- Central banks tighten too fast and too early.
- Inflation remains sticky for longer.
You told us your biggest financial fear of 2022 was inflation. But worry not, as Head of Research Christian Gattiker explains we’re already at ‘peak inflation’. Our first Beyond Markets Webcast of the year breaks down the market drivers in the coming months, looks at how our economies are ‘getting back in shape’ following the past two years of turbulence and gives you the lowdown on how to invest in 2022. Watch the highlights here.