What are the Key Themes for 2022?
Robert Lee, Co-Head of Multi-Asset Investments comments in Wealth Manager's 'Festival of Thematics'...
'We expect 2022 to be a year of deceleration and desynchronisation for the global economy, as the journey out of the pandemic towards normalisation continues but on an uneven and still moderately uncertain path. Continued supply chain disruptions, labour shortages and the threat of new Covid variants are likely to result in above average and sticky consumer price inflation across most of the world.
We still expect economic growth to remain relatively healthy as many economies slow from their strong and unprecedented 2021 pandemic rebounds. However, the pandemic is not over, and some economies will likely experience sharper slowdowns over others. Some, like China, may even accelerate in the second half of the year in response to new policy stimulus.
Against this backdrop, the key investment themes to focus on will be rising bond yields as central banks hike interest rates to tentatively tackle inflation without damaging their economic recoveries. Rising asset price volatility as these tightening monetary policies and above-average inflation levels test the resolve of corporate balance sheets, profit margins and financial markets. Finally, geographical diversification to help minimise these risks but whilst maintaining a high degree of tactical agility to take advantage of near-term market opportunities.'
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