“The fruits of the lower branches have all already been harvested, as they say, and in 2022 equity investors will have far fewer opportunities than in the past. At the level of equity indices, it is difficult to assume returns above average. However, there are good prospects for a continuation of the current bull market, albeit at more moderate levels than in 2021 ». It is the analysis of Christian Schmitt, portfolio manager of Ethenea Independent Investors.
Global economic growth is expected to be above average again in 2022. Central banks in the US, Europe and Japan continue to proceed with extreme caution in ending their ultra-accommodative monetary policy. At the same time, unchanged expectations of low fixed income yields should mean that equities will continue to experience structurally growing demand well into 2022 and that current high valuation levels will prevail for now. These have been the most important price drivers of the recent past and, coupled with solid sales and earnings growth on the corporate side, play in equity markets’ favor in 2022 as well.
But as these supporting factors continue to weaken, uncertainty and nervousness will continue to increase among market participants. This is likely to lead to rapid and sharp sectoral or style rotations. Whether there will be longer lasting sector winners will depend heavily on inflation, which is one of the most significant unknowns for the new year. Inflation risks were systematically underestimated in 2021, not only by businesses, but also by central banks and investors. Unless this attitude changes, year-end performance will clearly see inflation winners and losers.
Ultimately, in 2022 we still expect higher equity returns than all other major asset classes, such as bonds, cash and gold. As a result, the Ethna-Dynamisch fund portfolio will remain firmly positioned on equities, while the other asset classes will have a limited weight and solely for diversification reasons », concludes Schmitt. “However, given that the positive scenario of the stock market has clearly lost some of its strength compared to the past year, we believe that the most important aspect for the future will be the flexibility and the ability to adapt also to alternative scenarios”.
Source: RSS DiariodelWeb.it Economia by www.diariodelweb.it.
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