This article has been written by an expert contributor from J.P. Morgan Asset Management.
Overview
JPMorgan believes 2023 is likely to be a year of subpar economic performance among developed economies. However, policy support and relatively attractive valuations across many asset classes could facilitate a better year for investors. Some relaxation in COVID-19 containment policy through 2023 should bolster China’s economic recovery. A rebound in Chinese demand should help Asian economies reverse contracting exports to the U.S. and Europe.
Near-term economic challenges could still bring elevated volatility in risk assets, including equities. This calls for an emphasis on high-quality fixed income at the start of the new year. Yet, as the year progresses, the peak in policy rates in developed markets and stabilization in economic data should provide an opportunity to increase equity allocations. The early-recovery phase of an economic cycle typically presents the strongest return prospects. In addition to cyclical recovery, there are structural opportunities, such as renewable energy and Asian consumption, which could deliver long-term return to investors.
In the 2023 Year Ahead, JPMorgan address the 10 most frequently asked questions on the economy and asset allocation from investors across Asia. These are:
- Could the global economy go into a recession?
- Could high inflation in the U.S. turn into deflation?
- Could the Fed cut rates?
- Will China’s economic recovery benefit Asia?
- Can Asian economies thrive with a hawkish Fed and strong USD?
- What can go wrong?
- Can cash outperform again?
- Is it growth stocks’ turn to deliver?
- Could Asian equities outperform the U.S.?
- Time to go long duration in fixed income?
The J.P Morgan Asset Management Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions.
This document is a general communication being provided for informational purposes only. Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only.