As we look toward 2023, the global economic environment continues to be shaped by the aftermath of the pandemic shock. We are still in the midst of a peculiar economic cycle that started with a sudden stop in global economic activity and an unprecedented support from governments and central banks. Inflation has surged this year to levels not seen in decades and has prompted central banks to raise rates in a hurry. Rising prices and higher rates are expected to weigh on global economic activity next year, prompting global growth to cool down further. Some factors support the view that this slowdown will remain contained and that an economic “soft landing” is the most likely scenario after the wild ride of the past three years. However, risks remain clearly tilted to the downside on the economic front for the year to come.

This past year, one crisis (covid) was replaced by another (Russia / Ukraine) overnight. Let's review the 10 highlights of a year like no other.

Below are the top 10 events and surprises that could mark the financial markets and the global economy in the New Year. We believe that these events and surprises are vanilla ones. Nevertheless, we also try to assess the probability of occurrence (high, medium, low) for each one.

Hong Kong's foreign exchange reserves continue to fall as the authorities struggle to keep the HKD in the 7.75 - 7.85 range.

Despite its immense potential and outstanding performance over the past 30 years, India remains underrepresented in international portfolios.

One theory puts forward the existence of a four-year stock market cycle linked to the term of office of the US President. The second part of the cycle is historically the most favourable for equity markets.

While we believe that equity markets remain in a downtrend, the weight of the evidence leads us to upgrade our one-month tactical view on equities from “unattractive” to “cautious”. Our view on EM Asia equities moves from “cautious” to “positive”. We are also upgrading our stance on credit from “cautious” to “positive” (though favoring Investment Grade).

Most portfolios remain invested in the winners of the 2010-2020 period. leaving them exposed to the risk of missing out on new opportunities.

Equity markets historically outperform in the 6 months following 1 November. What are the reasons for this? Can we expect positive seasonality in the current market environment?

While China’s growth data surprised positively over the weekend, Hong Kong and US-listed Chinese stocks sold off on Monday in reaction to the conclusion of China's 20th Party Congress. What is our take on the latest political and economic news? What are the consequences for China equity markets?