Welcome to the first edition of our new annual outlook document, where we will explore the global economic landscape and discuss macroeconomic shifts that shape our vision for the future.
In a world of evolving opportunities and dynamic challenges, our outlook offers a forward-looking perspective that explores the latest market trends, geopolitical developments and economic indicators. This publication serves as a guide to key investment trends, ultimately determining our investment strategies and positioning our clients for success in an ever-changing environment over the long term.
Making market predictions is challenging at the best of times. However, the task becomes even more formidable when grappling with uncertainties such as the swiftest rate-hiking cycle in recent history driven by inflation concerns coupled with geopolitical events. It's evident that many 2023 forecasts missed the mark, with anticipated scenarios like a recession in the West, Chinese markets outperforming their developed counterparts, a mid-year pivot by the Federal Reserve and bonds outperforming equities not materialising as expected.
Forecasting is complex and, in many cases, impossible. Which is why, at LGT, we do not manage portfolios based on short-term market movements. Instead, our analysts highlight global shifts, themes and trends that reshape the investment landscape over the long term.
In the following sections, we will briefly discuss what the elections in some of the major global economies mean for markets as policies and geopolitical tensions take centre stage. We look at why Asian markets are poised to outperform developed markets as high interest rates begin to weigh on consumer and corporate balance sheets in the West. We also outline areas that should perform well now that interest rates, we believe, will start to come down. This includes private equity and corporate bonds. Quality companies, which have resilient business models, low debt and stable cashflows, will always remain a pillar of our investment approach, whether it’s in our equity or bond portfolios.