Dhe year 2022 is one to forget for investors. Especially in the asset classes equities and bonds. Despite the recent rebound, losses are still in the double-digit percentage range. Björn Jesch, chief investment strategist at fund company DWS, quickly identified the reasons: the Russian attack on the Ukrainethe energy crisis in Europe and galloping inflation, as well as China, whose traction for the global economy is waning.
It is all the more surprising that Sean Taylor, the chief investor for Asia at Deutsche Bank’s Hong Kong-based subsidiary, is not so critical of the Chinese market. A strong rally is quite possible, says Taylor, in the second half of next year prices in China could increase by 15 to 20 percent, he said.
Although Taylor expects the Communist Party to continue its zero-Covid policy, the restrictions will be handled flexibly. A clear roadmap out of the pandemic and a higher vaccination rate are possible catalysts for the local stock exchanges, Taylor announces.
With protests burgeoning in the country against restrictive lockdowns in the fight against the pandemic, Taylor doesn’t believe everything that’s seen on social media, despite strict censorship. “We also hear other things from the country,” he dismisses. “The next 24 to 48 hours will decide how the situation develops,” he says.
And a possible attack by China on Taiwan, which Beijing considers a “breakaway province”? Taylor puts the possibility of an attack “in the next five years” at “10 to 15 percent” – rather below average. “That’s not our basic scenario,” adds the DWS manager.
Intensification of the war in Ukraine
Now it was crises like the Russian attack on Ukraine that changed the world this year, including that of the stock exchanges. What is DWS expecting in the coming year? Jesch is more reserved: “If the intensity of the war in Ukraine increases again next spring, this could lead to difficulties. And Taiwan – we didn’t take that into account, but it could also become a risk.”
The investment strategists at the Deutsche Bank fund company are convinced that the problem of currently escalating inflation will be contained by the central banks. “The high point is behind us,” says Jesch. The fund company expects inflation to rise by 6 percent in the euro zone and 4.1 percent in the USA next year. Most recently, inflation in the euro zone was just under 11 percent and just under 8 percent in the USA. A lower rate of growth will have a dampening effect on inflation.
Banks have benefited from the turnaround in interest rates. And shares of European institutes appear to Marcus Poppe, portfolio manager at DWS, as a cheap buy. According to a media report, DWS itself would like to change its legal form in order to become more attractive to investors. Of course, Jesch does not want to comment on that.
All in all: DWS is cautiously optimistic about the capital markets in the coming year. But as Stefan Kreuzkamp, DWS veteran and longtime chief investment strategist, says, who is leaving the fund company at the end of the year: “You also need a bit of luck on the markets.”