There are four over-riding investment themes that investors will be watching and positioning for in 2023 in order to build their wealth, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.
Nigel Green of deVere Group’s comments come as global investors and savers take stock of a rocky year gone by and design portfolios for the one ahead.
He notes: “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% average. 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.”
The deVere CEO believes that there will be four major themes that will shape the investment landscape in 2023.
First, inflation is likely to peak in most major economies. “As inflation begins a return to target, the cost of living will drop for consumers and central banks will ease their feet off the economic brakes, going easier on interest rate hikes before winding down,” he says.
“We have seen recently how positively – and how quickly – markets reacted to the better-than-expected U.S. inflation data.
“Wage inflation remains an issue, but this should ease through the year.”
Second, China’s reopening. “China’s economy – the world’s second-largest – is coming out of hibernation after three years of coronavirus restrictions,” observes Nigel Green.
“This could be the most visible, most anticipated, and most impactful upside boost for global markets we’ve seen in recent times. The rebound is likely to be dramatic.”
Third, a weakening U.S. dollar. “We expect the dollar strength to peak in mid-2023.
“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.”
Fourth, the rotation. “As cost-of-living eases and global growth picks up pace throughout 2023, investors will be seeking to increase their exposure to growth stocks. These are stocks that grow at a rate higher than the market average, typically such as tech stocks.
“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,” concludes the deVere CEO.
“We expect more favourable conditions for the year ahead.”