Looking through the fog: 2022 outlook for wealth managers
As the year draws to a close, we take a look at what a range of wealth managers have to say about what they think is in store for 2022. Here’s a selection.
The company expects 2022 to continue to be a volatile year for stocks. The United States and Europe are expected to struggle with persistently rising inflation, while growth may begin to moderate in the second quarter as economies enter the late cycle expansion phase. Our team anticipates a more hawkish tone from central banks in the first half as their strategy shifts from transitory inflation to controlled inflation.
Although demand is expected to shift from goods to services and supply bottlenecks begin to ease, inflation could be more structural in wage growth, food prices, energy costs and housing prices. That said, tighter monetary policies could be offset by a record amount of fiscal stimulus, such as the US infrastructure bill. In an environment of slowing global growth and inflationary pressures, we will favor high quality growth companies with strong cash flow and pricing power.
In Asia, although corporate earnings growth is normalizing more at a gradual pace, we expect fewer headwinds along the way in 2022. growth moderation.
HSBC Asset Management
The current combination of booming demand for goods and crippled supply chains is set to continue as we approach 2022. Supply-demand imbalances, reinforced by the gradual normalization of policies, will weigh on the GDP. For the major economies, our scenario is that growth will be in the 4-5% range, with the UK and China up, and the US and Europe down. This implies that we should expect high single-digit earnings growth, even with rising costs putting pressure on margins.
The requirement to be realistic about growth is most evident in China. We expect a series of targeted easing measures to be introduced, but the common prosperity strategy means investors have to accept that underlying growth in China is around 5% for now.
“Asia has been [the] beneficiary of the rapid global recovery, although parts of Asia are still lagging far behind. The gradual normalization of policies, when the time comes, could have a significant impact. The tightening of financial conditions reveals hidden tensions in the system. Many Asian economies are much better placed to weather tighter global financial conditions, but concerns remain about spillovers to Asia, linked to fiscal deficits and foreign currency debt levels. A relative bright spot could be ASEAN, which has fallen far behind but should see a catch-up phase as the economic reopening progresses,” said Joseph Little, chief global strategist, HSBC Asset Management.
Our fears on the inflation front materialized, and then some [more]. While there are still good reasons to expect easing in the coming years from the current high inflation rates, troubling signs of a more persistent problem continue to grow. At the same time, the war on COVID has progressed less effectively than we anticipated or hoped for in March following remarkable early progress in vaccine development and delivery. The setbacks reflect both the emergence of new, more infectious strains of the virus and disappointing performance in vaccine adoption and distribution.
Overall, these developments have somewhat dampened recent growth performance and near-term prospects, while adding to the persistence of inflationary risks. This latter effect has been more worrying for G10 central banks and has caused them to adopt a more hawkish stance recently, raising the risk of the current expansion ending sooner than we had expected.
North America and most advanced European economies are expected to grow above 5% this year. The COVID-related downturns in the last quarter in the US and over the European winter should be followed as before with periods of strong growth next year. For 2022 as a whole, we see the US and Eurozone economies growing at rates of around 3.75% on a quarter-over-quarter basis – well above trend in both cases. Robust consumer spending will be driven by household balance sheets which have strengthened on the back of rising savings and asset values, as well as a pick-up in services spending as COVID-related headwinds ease .