Some of the world’s largest investors expect equities to post gains of more than 10% in 2023, but the road to recovery won’t be smooth.
In the recent optimism that inflation has peaked – and that Federal reserve It may soon start to change its tune: 71% of respondents in a Bloomberg News poll expect shares to rise, compared to a 19% drop, according to Al Arabiya.net.
The informal survey of 134 fund managers includes the views of leading 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 to expect in a post-inflationary 2023. the war in Ukraine and aggressive central bank policies hurt returns on equity this year.
Last year, a similar poll predicted that central bank policy tightening would be the biggest threat to equities in 2022.
modest profit
The survey showed that those expecting a rise in global equities 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 the previous rebounds such as 2009 or 2019 where the shares gained more than 30% and 20%, respectively.
Investors remain cautious at the start of the year and expect equity market gains to tilt in the second half of 2023. When it comes to certain sectors, respondents generally favor companies that could defend their earnings during the downturn. economic recessions. Dividend (which pays dividends periodically), insurance, health care, and low volatility stocks were among their picks.
MSCI extension
The biggest risks
According to 48% and 45% of respondents, wealth managers see the biggest threats to a potential recovery as somehow related, with high inflation or a deep recession topping investors’ list of concerns.
Clues to the path forward could arrive as early as next week as investors await a frenzy from key risks, including US consumer price data for November as well as interest rate decisions and comments from both the Federal Reserve and the Bank central European.
Technological recovery and optimism about China
After taking a hit this year with rising interest rates, US tech stocks could also recover, according to the survey. More than half of respondents said they would buy shares in the sector.
The survey revealed that around 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 well below the 20-year average, which makes it more attractive than their counterparts in the US or China Europe.
