Outlook 2022

Macroeconomic outlook?

On a global basis, we expect economic growth in 2022 to remain above potential but to be slower compared to 2021. Major central banks will remain supportive, but tend to provide less stimulus. The picture is similar on the fiscal policy side, where stimulus is set to wane in the coming quarters. Ongoing inflationary pressure will provide some headwinds, but will not have a lasting negative impact on the constructive economic setup, in our view.?

Investment strategy?

In our cross asset strategy, “real” assets and thus equities will remain in the spotlight in 2022. Investors should take risks in a prudent and controlled manner. We continue to prefer equities and commodities to fixed income. For equities, not only selection will be a success factor, but also sector rotation. Private market investments are also important portfolio components. Risks to be kept in mind are a strong economic slowdown in China, further rising inflation expectations and a possible misjudgment by central banks.?

Equity strategy?

We are entering the mature phase of the cycle, in which growth, monetary policy, earnings and valuations are starting to normalise. Lower earnings momentum coupled with abating central bank liquidity supply is likely to lead to higher volatility. For global equity markets, we see an upside potential of around 5% in 2022, plus dividends. We thus expect a below-average year for equities and favour the developed world over emerging markets, especially the US and Japan.?

Fixed income strategy?

Uncertainty about global growth and inflation prospects will continue to drive bonds and credit markets in 2022. The long-end neither reflects potential interest rate hikes nor higher inflation rates at the equilibrium stage, which we expect and is likely leading to steeper yield curves. Accordingly, we advise short duration and thus continue to favour corporate bonds in the hybrid segment. In the foreign-exchange market, the anticipated decreasing inflationary pressure in the medium-term supports the US dollar’s recovery rally, which is likely to fall victim to the large twin deficit and the slow Fed rate-hiking path later in the year. We expect further headwinds for gold before the outlook brightens following the phase of a stronger US dollar and decreasing inflationary pressure. We continue to see good demand for industrial metals, while oil currently seems fairly valued.?