Learn more about market trends Investment Outlook 2022. The great transition.
Where 2021 was all about Covid recovery, we see 2022 as the start of a major transition – one demanding close attention from investors keen to make the most of tomorrow.
The global economy is already emerging from the pandemic profoundly changed. There is significantly higher public debt, the trend toward digitization has accelerated particularly in healthcare, banking and retail, and there is a far greater emphasis on sustainability post-COP26 (Climate Change Conference 2021 in Glasgow).
Our Investment Outlook 2022 looks at what you need to know to stay a step ahead as the global economy moves beyond pandemic volatility to a new normal. We predict solid demand to drive global growth of 4.3%1 in real terms – an uptick on pre-pandemic levels – and earnings growth of 7.6%2, despite a labor shortage and some production issues potentially fueling inflation. This presents interesting opportunities for investors in certain equities, real estate and hedge funds, among other asset classes.
Watch our House View for 2022
Hear from Nannette Hechler-Fayd’herbe, Chief Investment Officer, International Wealth Management at Credit Suisse, about what will shape markets in the coming 12 months.
Position for the best growth
At 4.3%3, economic growth will be above pre-pandemic levels, but not all sectors will grow equally. Areas to watch are those that lagged behind the early recovery – particularly services, such as restaurants and travel, which we expect to outperform. Our forecast for manufacturing and industrial production is good, once supply-chain problems are resolved.
Be aware of the threat of inflation
While there has been much talk of inflation, we see recent inflationary pressures as largely transitory, due in part to the temporary nature of the supply shortages. Still, we expect it to remain above central bank targets and that in response central banks will slow their asset buying (quantitative easing) rather than increase interest rates. But the threat alone is reason enough to stay light in bonds and cash.
Keep an eye on interest rates
Interest-rate rises are most likely in the U.K. and some emerging markets such as Brazil and Turkey. In the U.K., the combination of Brexit, labor and other supply shortages will make inflation tougher to overcome than elsewhere, and we forecast two rate rises in 2022. In Brazil and possibly Turkey, high government debt could also fuel rate rises.
Elsewhere, we see governments winding down Covid-mitigation stimulus and asset buying, trying to manage their debt and therefore leaving interest rates unchanged for 2022. However, the combination of slightly lower inflation and steady or higher interest rates could push real interest rates upward. Another strike against cash and bonds.
Stay a step ahead across all asset classes
Equities, on the other hand, look set to benefit from strong global growth, albeit with earnings growth in the single figures. Besides the aforementioned services, sectors to seek out are those that can pass on rising costs and those insulated from possible supply-chain disruptions. We also favor cutting-edge sectors focused on sustainable solutions – agritech and foodtech, for example.
We expect real estate to respond well to low interest rates, but the picture is less clear for commodities. Supply shortages have lifted prices, but this is short-term. Energy markets will remain volatile over winter and gold could fall as normality returns. Finally, private markets and hedge funds remain areas of opportunity for those well advised or highly experienced.
If you’d like to know more about our outlook for 2022 and our roadmap for investors:Download Investment Outlook 2022 (PDF) This link target opens in a new window Contact us This link target opens in a new window
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To the extent that these materials contain statements about the future, such statements are forward looking and are subject to a number of risks and uncertainties and are not a guarantee of future results.
1 "Investment Outlook 2022", p. 18 (Credit Suisse), November 2021
2 "Investment Outlook 2022", p. 39 (Credit Suisse), November 2021
3 "Investment Outlook 2022", p. 18 (Credit Suisse), November 2021
Source: Credit Suisse, unless otherwise noted.