Active multi-asset specialist, EFG Asset Management, has today released their thoughts on the key themes that will play out in markets in 2023
A full list of the 2023 predictions can be found here
1. Emerging Equities & Debt to Rally:
Despite record fund outflows and notable Emerging Market fund closures in 2022, we predict an Emerging Market rally in 2023.
We believe a recovery in China and Europe, and strong Japanese corporate performance, will feed through to not just in the rest of Asia, but further afield in emerging economies.
2. Consumer Discretionary Sector’s ‘Buy’ Signals:
It may seem counterintuitive from today’s economic challenges, but we expect Consumer Discretionary to rally in 2023.
As inflation eases, wage resilience and high-cost mortgages will likely encourage short-term discretionary spending, and with low levels of credit card defaults in a stricter lending environment.
3. Weaker US dollar trend:
The US dollar outlook has divided opinion. Our conviction is that, having trended upwards for more than a decade, US dollar reached overvalued levels in late 2022.
The direction of relative interest rates and capital flows also suggest a weaker dollar trend and that 2023 will be a year of correction.
4. Good Opportunities in Global Small Caps
Small Caps have been overlooked in favour of Large Caps, which have also benefited from the early 2000’s preference for passive investments.
Now, Small Caps offer a nimble active equity play at attractive valuations, and in an environment mimicking the 1970s in which US Large Caps stalled
5. Markets & Global Growth Return to Reality
6. Inflation (finally) subsides
7. Japan’s renaissance continues
8. Bond vigilantes remain on patrol
9. Investment Grade Bonds remain attractive relative to High Yield and Government deb
10. Easing Geopolitical Tensions support Multi-Asset Markets.