Brett Grant, Head of Product, Customer Experience and Marketing at Australia’s leading wholesale trading platform AUSIEX and Kerry Craig, Executive Director at J.P. Morgan Asset Management said despite continued economic unrest around the world, investment analysts remain quietly confident about the prospects for a better 2023.
“The key is to look for quality assets as an extra defence against the potential for deeper economic slowdowns than many pundits predict,” Mr Grant said.
“This is particularly true after a banking crisis that roiled global markets and dented confidence in the sector.”
Mr Grant said the remainder of the first half of the year was forecast to include continuing rate rises in the United States and Australia.
“However, that was before Silicon Valley Bank’s collapse sparked a broader crisis that ultimately ensnared Swiss banking giant Credit Suisse,” he said.
“Much is being discussed and written about the impact of the crisis across both fixed income and equity, as well as private markets.
“Everyone in the market is looking for the next signals and potentially will react to them. A key, obviously, is for advisers and their clients to take a long-term view to investing.”
He said that investors with a 12 to 24-month horizon, can capitalise on opportunities in both equities and fixed income that exist after a difficult 2022 in which both asset classes fell.
And while the outlook for equities remains uncertain in the short term, medium-term valuations are much more compelling.
“Quality is key because of the risks to both economic and earnings growth, and while expectations for centrals banks to hike rates are much lower, they can still get it wrong,” he said.
Mr Grant said in terms of shares, that means maintaining a focus on companies with reliable earnings and diversifying global portfolios across a broader range of markets to mitigate against a potential US recession.
“China’s reopening is likely to spur its growth and the flow on effect to other Asian markets will provide another avenue for diversification, particularly due to a weakening US dollar,” he added.
“Europe is also looking better than forecast because mild weather meant its energy crisis wasn’t as bad as forecast. It was also able to diversify its energy sources as a result of China’s lockdown and may now record a small expansion instead of a recession.
“Quality is equally key to fixed interest in the current environment, with investors consider adding duration to a portfolio and focus on the safer end of the credit market.”
