According to the expert, you should have China on the bill by region. The economy is currently undergoing a transformation as a result of government interventions in the recent past.

Gerold Permoser, Chief Investment Officer at Erste Sparinvest, agrees. The country’s economy is being restructured towards a strengthening of the domestic economy and greater independence for the country. As a result of this reorientation, China will grow more slowly in the short term, but in the longer term it will be positive for China’s growth prospects. According to Permoser, this restructuring also poses risks for the global capital markets.

Quickly out of crisis

And there are others. Compared to previous recessions, the world emerged from the crisis relatively quickly. The key to this was the monetary and fiscal policy of the central banks and governments, which supported the strong recovery with their support. In 2022, this development will be borne by the private sector. However, Permoser sees the risk of overheating due to the rapid recovery. This has been felt for some time when there is a shortage of raw materials, which is also driving inflation – another problem. Transport and logistics costs would add to this fuel. “Are semiconductors becoming the new oil?” He asks himself the question.

According to Permoser, the central banks are coming under pressure due to the high inflation. If they make mistakes in scaling back their aid programs or in their interest rate policy, this could also have a negative impact on the stock markets.

Profits rise

“We expect that profits will continue to rise in 2022, but no longer with the dynamism that we saw this year.” The expert expects the share price to increase by 5 to 10 percent. Europe should stay ahead of the game and watch out for a low level of government when it comes to Chinese stocks, he advised. The recovery continues in the energy sector, and raw materials have to be increasingly diversified, for example in the direction of rare earths. Alternatives to stocks are still few and far between. Government bonds are still unattractive because of the risk of interest rate changes.

Deutsche Bank also provides interesting insights in its capital market outlook for the year 2022. In any case, it should be the year of the interest rate turnaround, according to the assessment. Above all, the US Federal Reserve is likely to be forced to act in the face of high inflation and the continued economic recovery.

Good environment

While this could cause turmoil in bond markets, it is a good environment for equities, it said: “Despite a rate hike by the Fed and a possible tightening of monetary policy in other parts of the world, ongoing financial repression should continue to support and lead the markets that the investment focus is currently on real asset classes such as stocks and real estate, ”said Ulrich Stephan, chief investment strategist for private customer bank Germany at Deutsche Bank.

It is true that there will be a decline in dynamics. But: “The company’s sustained growth in earnings should continue to drive the stock markets.” He does not expect the price-earnings ratio to expand, but the return for 2022 will “roughly correspond to the expected growth in earnings of eight to nine percent”.

Pent-up demand

Companies in entertainment electronics or tourism would benefit, for example, because of the pent-up demand. The order books of the industrial groups are already well filled, and “when the pandemic subsides, there is still room for improvement when it comes to the consumption of services,” says Stephan. “Auto production in Europe and the USA” should soon recover because of a “higher supply of semiconductors from Asia”, even if the problem of chip shortages has not yet been completely resolved.

“The prerequisites for a global end-of-year rally are basically intact, but thanks to Omikron the pandemic has become an increasingly important topic for the markets again,” says Alexander Adrian, fund manager at Schoellerbank. “Positive news about the new Corona mutant and an easing of the oil price would help, because this would reduce inflation expectations and counteract possible interest rate hikes. “In addition, if more stringent Covid restrictions were required, the central banks would very likely react in a supportive manner to the market.”

Extremely cheap

Looking at company profits in relation to current prices, shares, with the exception of the USA, do not appear to be valued excessively, especially in Asia, the shares are extremely cheap. Schoellerbank remains confident about broadly diversified investments in China and Japan.

But of course Covid could lead to setbacks. However, he does not believe in global lockdowns. “Invest globally to minimize risks”, is his advice. The world has also come to terms with the delivery problems. “The companies have additional suppliers and their own warehouses.” A selective selection of stocks is now important. “It is good to stay invested, also because there are no alternatives. It’s not just about the next one or two months, ”says Adrian.

By Editor

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