Some of the world’s largest investors expect equities to see gains of more than 10% in 2023, but the road to recovery will not be linear.
Amid recent optimism that inflation has peaked – and that Federal Reserve He may soon start to change his tone – 71% of respondents in a Bloomberg News poll expect stocks to rise, compared to a 19% drop, according to what was seen by Al Arabiya.net.
The informal survey of 134 fund managers includes the views of major investors including BlackRock, Goldman Sachs and Amundi, and was conducted between November 29 and December 7, and provides insight into the big themes and hurdles they expect in a post-inflationary 2023. The war in Ukraine and hawkish policies from central banks have hurt returns on equity this year.
Last year, a similar survey predicted that hawkish policy tightening by central banks would be the biggest threat to stocks in 2022.
modest profit
The survey showed that those who expect global equities to rise see gains of 10% on average for 2023. This is in line with the historical average return of the MSCI All-Country World Index, however it seems modest given previous rebounds such as 2009 or 2019 where stocks gained more than 30% and 20%, respectively.
Investors remain cautious at the start of the year and expect stock market gains to tilt into the second half of 2023. When it comes to certain sectors, respondents generally preferred companies that could defend their earnings during economic downturns. Dividend (which pays dividends periodically), insurance, healthcare and low-volatility stocks were among their picks.
MSCI
The biggest risks
Asset managers see the biggest threats to a potential recovery as somewhat interrelated, with high inflation or a deep recession ranking high on the list of investor concerns, according to 48% and 45% of respondents, respectively.
Clues about the path ahead may come as early as next week as investors await a frenzy from major risks, including US consumer price data for November as well as interest rate decisions and comments from both the Federal Reserve and the European Central Bank.
Technology recovery and optimism about China
After taking a beating this year with rising interest rates, US technology stocks may also bounce back, according to the survey. More than half of the respondents said they would buy stocks in the sector.
The survey revealed that about 60% of investors are optimistic about China, especially as it moves away from the zero Covid policy, as the recession earlier this year made valuations much lower than the 20-year average, which makes them more attractive compared to their counterparts in the United States or China. Europe.