Investment Outlook 2022 – mid-year update

The investment landscape has changed substantially in the last six months: conflict has broken out in Ukraine, leading to various geopolitical and social ramifications, and inflationary pressure has been rising and remains a concern across many regions.

This calls for a reassessment of the outlook for the rest of the year as investors seek to balance risk with opportunity amid market instability. We therefore hosted a digital conference in June: Investment Outlook 2022 “Embracing Change – Mid-Year Update”, featuring presentations by Co-CEO of Asset Management & Group CIO Michaël Lok, CIO of Wealth Management Norman Villamin, and Chief Economist Patrice Gautry, as well as several other experts. To complement the discussion, we have produced the brochure detailing the topics covered.

Learn more by reading the brochure

Key points

The world economy is set to slow significantly over the remainder of 2022. The chances of a recession have risen and could increase further, notably in Europe. However, we expect central banks to take a more pragmatic approach at the end of 2022 and into 2023 as inflation eases, providing an opportunity for the global economy to skirt an outright recession.
A shift in expectations of Fed tightening in particular should bring about a peak in the US dollar. Current account surplus currencies – euro, Swiss franc, and Japanese yen – should be primary beneficiaries. Downside in gold below USD 1,800/oz should be limited.
The start of a tightening cycle by the European Central Bank means that both German and US 10-year yields should continue to move higher towards 2% and 3.5% respectively in the second half.
The slowing in the global economy should put upward pressure on credit spreads, especially in high-yield and emerging market debt, where they are underpricing the prospect of a slowdown and deteriorating credit metrics. Fixed income hedge fund strategies should continue to provide shelter for bond investors as rising rates are joined by widening spreads in the months ahead.
Equities have only partially factored in a soft landing for the global economy and appear richly priced relative to bonds generally and credit in particular. High-quality, high-visibility earnings will hold the key in the months ahead as earnings risk becomes more prominent.
Select industrial companies should benefit from governments’ accelerated spending to counteract the economic slowdown.

Where do we stand with hedge funds?

Will the economic environment be supportive of alternative strategies in the next six months?

Find out what our expert Kier Boley thinks by watching this video.

Forex outlook for H2 2022

In this video, UBP’s Global Head of Forex Strategy Peter Kinsella shares his thoughts on what the foreign exchange markets have in store over the remainder of the year.

Watch now to find out.