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Global Investment Outlook 2023

Xavier Baraton

Parallel Worlds

We’ve entitled the outlook “Parallel Worlds”. Our motivation for using this phrase is to reflect some different realities which confront investors in 2023 – that is to say, different economic trends in different parts of the world, a different economic environment versus what we have become accustomed to in the 2010s, and some big and important shifts in market valuations, which we think really change the game for investors.

If 2022 was a year of the inflation surge, rising rates and falling equity market multiples, we think 2023 is going to be a year about the macro cycle.

During 2022, we have faced “a global poly-crisis”. Geopolitical uncertainties, a China growth slowdown, stagflation, the climate crisis, financial instability and recession risks all had an impact on markets, individually and collectively.

As part of our “parallel worlds” theme, we state that cyclically, the world economy is in different situations. It should create some relative-value opportunities for global investors in 2023.

Read the full 2023 Investment Outlook

Today’s markets feel like a ‘parallel world’

	Investors have experienced a ‘poly-crisis’ of rolling economic and market shocks in 2022. During the year, it has often felt like a ‘parallel world’.
	The 2023 economic outlook is ‘parallel’. Global inflation is slowing, and we are moving past the peak in interest rates, but while there is recession risk in the West, the East continues its recovery and re-opening.
	Longer-term forces and a shift in policy choices herald a new economic and market regime. This new environment has meant a ‘parallel’ shift in valuations.
	‘Parallel Worlds’ requires a new investment playbook. That includes dynamic asset allocation, a renewed focus on active management, and greater geographical diversification.

‘Parallel worlds’ require a new investment strategy playbook

Portfolio dynamism

The regime of 'no alternative to equities' is over, creating more opportunity for portfolio dynamism

Bonds now deliver yield

Shorter-term bonds are the ‘natural assets’ in the current economic phase

Lower valuations place many opportunities on the radar

Active in emerging markets

In a turbulent world, dispersion in performance between markets remains high

Valuations, a peaking US dollar and China policy support create opportunities for emerging markets

Country allocations can be a source of diversification and outperformance

New diversifiers

The hunt for new diversifiers has intensified

More-defensive allocations make sense (e.g. infrastructure, property)

True-uncorrelated asset classes remain attractive. Here, alternative assets can be useful

Investment expertise

Fixed income

Multi-asset

Liquidity

Equities

Sustainable investments

Risk Warning

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Past performance is not a reliable indicator of future performance. Any views and opinions expressed are subject to change without notice. Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. We accept no liability for any failure to meet such forecast, projection or target. This webpage has not been reviewed by the Securities and Futures Commission. The information provided does not constitute any investment recommendation in the above mentioned sectors, asset classes, indices or currencies.