Winston

Opening Note

The tumultuous spell of 2022 is expected to spillover through 2023 with the new year expected to start off on an uncertain note as investors weigh on potential recessionary risks, inflation trends, and the monetary policy path of global central banks.

Geopolitical tensions will also need to be assessed, with the Russia-Ukraine conflict set to drag on beyond the one-year mark. While things remain fluid over contentious issues such as US-Sino tensions and US semiconductor curbs on China, an amicable meeting between US President Biden and Chinese President Xi at the November 2022 G20 Summit has raised hopes of an improvement in US-China bilateral ties.

Assuming China continues its re-opening path post-COVID, and global central bank tightening slows, the storm clouds may start to break, resulting in a short and shallow recession in 2023. While there are still many variables at play, a greater sense of clarity may start to emerge as we approach the second half of the year.

With volatility expected ahead, steering your portfolios through market gyrations may prove to be a challenge. Let our investment insights help you make sense of the noise and build strong foundations for brighter days ahead.

Thank you.

Ronnie Lim
Managing Director & Country Head
Personal Financial Services
UOB Malaysia

Our Risk-First Approach

2023 Macro Outlook

The global economic outlook is set to be weaker in 2023, hampered by high inflation and aggressive monetary policy tightening by major central banks. From a top-down perspective, the main talking point for 2023 is whether global recession risks become reality, and whether the contraction will be shallow or deep, short or sustained. Our view is that any recession will be shallow and short.

2022 was a year of elevated volatility, where simultaneous sell-offs in global equities and bonds left investors with no place to hide from the storm.

Will this continue into 2023, or will we see a return to the negative stock-bond relationship seen in the past two decades?

The long-term trend reveals that stock-bond correlationsIcon Tooltip depend on inflation. Assuming inflation declines over the coming year, a return to a negative correlation should play out, especially if a recession were to hit, as that will benefit bonds. If so, portfolio allocations should become less tricky in the year ahead.

Indeed, we may see some respite in 2023 from surging inflation and aggressive monetary policy tightening. Headline consumer price index (CPI) inflation should generally peak and trend lower owing to a high base of comparisonIcon Tooltip, while the pullback in commodity prices will also help. This should then allow central banks to slow and pause their tightening cycle.

Overall, an uncertain first half of the year may give way to more clarity by the middle of the year, and set up a more conducive backdrop for risk assets in the second half of 2023.

As such, investors may be well served by slowly accumulating risk assets, buying on dips to position for the next upward cycle, with an initial focus on defensive and quality growth stocks.

Start Exploring

2023 Outlook

2023 Outlook

Explore what lies ahead for the economy and global financial markets in 2023.

Trending Topics of Interest

Trending Topics of Interest

Discover key developments that could move markets in the year ahead.

What Investors Can Do

What Investors Can Do

Learn how to build a resilient portfolio consisting of Core and Tactical investments, based on your risk appetite.

Our Strategies

Our Strategies

Find out how UOB’s Risk-First Approach guides you to take the appropriate amount of risk before looking at your desired returns.

Additional Resources

Contact a UOB Advisor

Contact a UOB Advisor

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Download a digital copy

Credits

Credits
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Managing Editor
  • Winston Lim, CFA
    Singapore and Regional Head,
    Deposits and Wealth Management
    Personal Financial Services
Editorial Team
  • Abel Lim
    Singapore Head,
    Wealth Management
    Advisory and Strategy
  • Michele Fong
    Head, Wealth Advisory and Communications
  • Tan Jian Hui
    Investment Strategist,
    Investment Strategy and Communications
  • Low Xian Li
    Investment Strategist,
    Investment Strategy and Communications
  • Zack Tang
    Investment Strategist,
    Investment Strategy and Communications
UOB Personal Financial Services Investment Committee
  • Singapore
    • Abel Lim
    • Ernest Low
    • Michele Fong
    • Tan Jian Hui
    • Low Xian Li
    • Zack Tang
    • Jonathan Conley
    • Alexandre Thoniel, CAIA
    • Chen Xuan Wei, CFA
    • Christine Ku
    • Daphne Chan
    • Jaime Liew
    • Shawn Tan
    • Marcus Lee, CFTe, CMT
    • Ivan Hu
  • Malaysia
    • Joel Tan
  • Thailand
    • Suwiwan Hoysakul
  • China
    • Huang Li Li
  • Indonesia
    • Diendy

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