A combination of reducing inflation, China’s reopening, a weaker US dollar and rotation back to growth stocks will dominate the investment landscape in 2023, creating a more favourable environment for investors, says deVere CEO Nigel Green.
Green says: “Global stock markets fell by a staggering 18% in 2022 on average. Bond markets – traditionally a safe haven in times of volatility – have declined by 12% averagely. And as corrections go, the cryptocurrency one this year has been particularly punishing.
“The downward moves of financial markets have wiped tens of trillions of dollars in wealth over the last year. This is why investors and savers are more alert than ever to the major themes that will define the year ahead.”
According to Green, inflation is likely to peak in most major economies over the coming 12 months, leading to a drop in the cost of living for consumers and a slowing down in interest rate hikes.
China’s reopening after three years of Covid-19 restrictions will also impact global markets, with Green anticipating the rebound to be dramatic.
Green also cites a weakening US dollar as a key feature of 2023, with dollar strength set to peak in mid-2023.
Green says: “A strong dollar has hit both developed and emerging markets globally, fuelling Inflation and raising the cost of imported goods. It has also added to the need for some central banks around the world to tighten their own financial conditions. This will all ease when the dollar’s supremacy weakens.”
Finally, rotation will be a key theme for 2023. As the cost of living eases and global growth picks up pace throughout the year, investors will be seeking to increase their exposure to growth stocks, according to Green.
“Inflation peaking, China’s reopening, the dollar’s weakening, and the rotation toward growth stocks will dominate the global investor mindset in 2023 as they seek to create and build wealth after a challenging 2022. We expect more favourable conditions for the year ahead,” he adds.
