Top investors predict double-digit stock gains in 2023

Some of the world’s biggest investors predict that stocks will see low double-digit gains next year, which would bring relief after global equities suffered their worst loss since 2008.

Amid recent optimism that inflation has peaked – and that the Federal Reserve could soon start to change its tone – 71% of respondents in a Bloomberg News survey expect equities to rise, versus 19% forecasting declines.

For those seeing gains, the average response was a 10% return.

The informal survey of 134 fund managers incorporates the views of major investors including BlackRock, Goldman Sachs Asset Management, and Amundi SA.

It provides an insight into the big themes and hurdles they expect to be grappling with in 2023 after inflation, the war in Ukraine and hawkish central banks battered equity returns this year.

The stock market could be derailed again by stubbornly high inflation or a deep recession, however.

Those are the top worries for the upcoming year, cited by 48% and 45% of participants, respectively. Stocks could also reach new lows early in 2023, with many seeing gains skewed to the second half.

“Even though we might face a recession and falling profits, we have already discounted part of it in 2022,” said Pia Haak, chief investment officer at Swedbank Robur, Sweden’s biggest fund manager.

“We will have better visibility coming into 2023 and this will hopefully help markets.”

Even after a recent rally, the MSCI All-Country World Index is on track for its worst year since the global financial crisis in 2008.

The S&P 500 will probably end 2022 with a similarly poor performance.

The energy crisis in Europe and signs of slower economic growth have kept a lid on stock prices even as China begins to ease some of its tough Covid curbs.

Plus, there are growing fears that the slowdown already underway in many economies will eventually take a bite out of earnings.

The Bloomberg survey was conducted by reporters who reached out to fund managers and strategists at major investment firms between November 29 and December 7.

Last year, a similar survey predicted that aggressive policy tightening by central banks would be the biggest threat to stocks in 2022.

Tech comes back

Hideyuki Ishiguro, senior strategist at Nomura Asset Management, expects 2023 to be the “exact opposite of this year.”

Part of that is due to valuations, which have slumped to leave the MSCI ACWI trading near its long-term average forward 12-month price-to-earnings ratio.

When it comes to specific sectors, respondents generally favoured companies that can defend earnings through an economic downturn.

Dividend payers and insurance, health care and low volatility stocks were among their picks, while some preferred banks and emerging markets including India, Indonesia and Vietnam.

After being hammered this year as interest rates climbed, US technology stocks may also come back in favour, according to the survey.

More than half of respondents said they’d selectively buy the sector.

With valuations still relatively cheap despite the recent rally and bond yields expected to fall next year, tech behemoths including Apple,, and Google parent Alphabet are expected to benefit, fund managers said.

Some are bullish on China, particularly as it moves away from Covid zero. A slump earlier this year has put valuations well below their 20-year average, making them more attractive compared with US or European peers.

Evgenia Molotova, senior investment manager at Pictet Asset Management, said she would be a selective buyer of Chinese shares “at current levels,” preferring industrials, insurance and health care in China.

In the Bloomberg survey, the 10% gain predicted for stocks in 2023 would fall short of previous market rebounds, such as in 2009 and 2019.

For fund managers, better news on inflation and growth could be the catalysts for a stronger performance.

Almost 70% of respondents said they were the main potential positive factors. They also cited a full China reopening and a ceasefire in Ukraine as upside triggers.

The emphasis on inflation and growth as the make-or-break elements is in line with the findings of Bank of America’s latest fund manager survey.

It showed recession expectations were at the highest since April 2020, while a “stagflation” scenario of low growth and high inflation was “overwhelmingly” the consensus view.

Such worries look warranted. According to Bloomberg Economics, the global economy is heading for its weakest performance in years, excluding the financial crisis and Covid periods.

The IMF said last month the situation is rapidly worsening.

“The outlook from here onward will be influenced by the probability, depth and longevity of recession,” said Fabiana Fedeli, chief investment officer for equities, multi-asset and sustainability at M&G.

“There are still pockets of opportunity where companies with strong fundamentals that are able to weather the storm get sold off in times of market panic.”

Heading into year-end, the market direction hinges on two key events coming next week – US inflation data on Tuesday and the Fed policy decision a day later.

Some good news has emerged here: price increases have started to cool after hitting a four-decade high and the central bank has signaled it may slow the pace of rate hikes.

“A sustained rally in risk assets isn’t likely until inflation is more firmly downward trending toward target,” said Shoqat Bunglawala, head of multi-asset solutions for EMEA and Asia Pacific at Goldman Sachs Asset Management.

He’s maintaining a relatively defensive asset allocation in balanced portfolios.

Ben Powell, chief investment strategist for APAC at the BlackRock Investment Institute, is also cautious, saying stocks aren’t yet reflecting the full impact of tighter monetary policy.

“We’ve had the lightning of policy tightening in 2022 and now the thunder will follow – that is to say, the damage,” he said.

“Maybe we’re seeing some signs of the slowdown in exports and housing, but that’s going to become clearer next year and the market needs to price that a bit more effectively.”


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