2023 presents some shadows but also many lights: in the first part of the year i wallets they will be defensive, but ready to adapt quickly to the changes that will occur in the months to come. There will be opportunities to benefit from investment strategy adjustments, thanks to a greater frequency of meetings between advisor and client. It is what emerges from the mapping that theItalian Private Banking Association (AIPB) carried out on a representative sample of the outlooks elaborated by the associated Asset Managers.
In this context, explains the president of the Italian private banking association (Aipb) Andrea Ragani, "the professional financial advice offered by Private Banking operators will be crucial in directing customers' investment choices in an uncertain geopolitical, economic and financial scenario, subject to rapid changes with significant impacts on managed assets". The role of professional consultancy, and above all of private consultancy, which must monitor and rapidly adapt investment choices to a rapidly changing scenario, is therefore "evident".
Private banking: uncertain scenario but peak inflation behind
The current picture is characterized by three factors: the transition towards a new international scenario, coexistence with inflation and the tightening of monetary policy.
The geopolitical scenario, which investors will have to deal with this year, will continue to be characterized by uncertainty due to persistent tensions. To a Russian-Ukrainian conflict far from its resolution is added aChinese economy still weak due to the complicated management of three important challenges: the exit from the pandemic, strong technological and commercial competition with the United States and tense relations with Taiwan, due to independence pushes.
In between, Europe must find its own strategic approach among the 27 Member States in dealing with other world powers.
Slight recession more likely in Europe than in the USA
The expectation is for a slowdown in global growth (56% of operators), in an economic context marked by uncertainty and rapid changes. The weakening of the economy is linked both to the coordinated withdrawal of accommodating policies and to specific risks of individual countries. Traders believe a mild recession is more likely in Europe (88%) than in the USA (44%).
From the analysis of the outlooks, we note the unanimous view of the Asset Managers, according to which the peak of inflation was reached in 2022 and the return to the 2% target will not happen this year, seeing the USA precede the EU. More than half (53%) believe that inflation will remain above target over the next three years, and only 1 in 5 think it will suffer a sharp fall approaching 2%. Also with respect to interest rate trends, the associated Asset Managers expect them to rise in 2023 (the Fed's peak is in a range between 5 and 5,5%, while that of the ECB between 3,3 and 4 %). Instead, we find divergent opinions on the return of the monetary tightening: just under half (47%) believe that the restrictive action will end within the first half of the year, 20% think not before next year. Once the tightening is over, the Fed and the ECB would keep rates unchanged, evaluating the stability of growth. In the most rosy scenario the evolution of global business cycle may take the form of a slight slowdown, averting a recession. A sharp slowdown in the economy is in any case an eventuality to be monitored and would have, as a probable shock absorber, a once again accommodating monetary policy stance.
Portfolio picks for 2023
Le choices of investment of private banking operators for the 2023 they see “a return of bonds, with strong interest in government bonds, especially the USA, and investment grade corporate bonds, while the context for high yield remains uncertain”.
In detail, the mapping of the outlooks shows the possibility that the markets are volatile, especially in the first part of the year, and which leads to a prevailing orientation on the sector stock cautious, waiting for ratings to reflect the slowdown economic: value stocks are preferred over growth stocks. Private markets remain a source of opportunity, especially for infrastructure and private debt, but with a selective approach. Instead, the view on raw materials is fragmented and the main uncertainties are linked to the reduction of anti-Covid measures in China and the evolution of the European energy crisis. Moving on to currencies, the dollar it should be monitored and underweighted, while the view on the rest is neutral. Finally, it should be noted that in the next few years the greatest opportunities will be found in high yield bonds, growth equities, private equity and the real estate sector.
Finally, the mapping of the outlooks highlights that a determining factor for the construction of an investment strategy lies in identifying in advance the potential structural changes in the world economy, investing in the transformations underway which transversally influence geographies, sectors and all aspects of the economy. Between these megatrend investment we find demographic trends and social changes, deglobalization and the change of economic balances, climate change, energy and technological transition.
