Neelam Verma, Vice President and Chief Investment Officer, Continental Group.
In the latest edition of its popular webinar series, The Continental Group hosted experts to discuss the status quo in global financial markets and conducted audience polls to gauge investor sentiment heading into 2022.
The Continental Group, a leading insurance intermediary and financial services provider in the GCC region, hosted a webinar entitled “The Road Ahead”, allowing for expert discussions on global financial markets, the performance of 2021 and forecasts for 2022. The survey, conducted as part of the webinar, provided insight into investor sentiment.
Tom Planterose, Senior Portfolio Manager, Sanlam Private Wealth UK; Paul Jackson, Global Head of Asset Allocation, Invesco; and Neelam Verma, Vice President and Chief Investment Officer, Continental Group, were the keynote speakers, and the webinar was moderated by Anselm Mendes, Executive Director of Sales, The Continental Group.
The majority of respondents recognized finance, technology and energy as the preferred investment options.
“Forecasting is an integral part of financial advice. But, if 2021 were to happen, the financial markets can still surprise you. So your best bet is to diversify your portfolio, conduct financial reviews, rebalance based on performance, and stay focused on your long-term goals by making the role of financial advisors paramount,” Neelam said. Verma, Vice President and Chief Investment Officer at The Continental Group.
The rally in equities in 2021 defied earlier predictions, pandemic cycles and rising inflation, inspiring widespread investment momentum. Meanwhile, government bond yields continued to fall as the threat of inflation and economic uncertainty loomed. The impact is such that in the survey, around 50% of respondents said high inflation is their biggest concern when it comes to their investment portfolios.
“Inflation is the focal point for central banks in 2022. As a result, we could see interest rates rise and their repercussions leading to volatility in stock markets. So patience is advised. , to do due diligence, set clear goals and focus on fundamentals, because simply buying sentiment could be like catching a falling knife,” said Tom Planterose, manager of main portfolio, Sanlam Private Wealth.
As many as 81% of respondents said they expected prices to rise faster than income levels. Rising inflation is also accompanied by slowing economic growth and stable levels of unemployment – a recession-inflation phenomenon, commonly referred to as “stagflation”. This poses a dilemma in which measures taken to fight inflation make unemployment worse.
However, in the words of Paul Jackman, Global Head of Asset Allocation, Invesco, “2022 is about adapting to market dynamics”.
“The recovery in equities will slow and bond yields will improve. So there will be convergence in margins, unlike the divergence we saw in 2021. As central banks remove support and stop buying assets, investors may seek refuge in commodities for protection The general rule is don’t worry about what’s not in your portfolio, but worry about what’s in it; buy what you understand and ignore the noise,” added Jackman.
His upbeat sentiment was echoed by 75% of survey respondents, who said they expected the S&P 500 to deliver returns above 5% by the end of 2022. Experts believe emerging markets could also generate similar returns, with the US, UK, and Indian exchanges leading the charge.
A pick-up in Chinese growth and a potentially more economy-friendly Chinese government, especially during the Beijing 2022 Winter Olympics, should help sentiment. Preference will be given to stocks and sectors benefiting from the economic recovery as the coronavirus crisis continues to fade. Regarding the GCC region, the banking sector should benefit from the increase in US interest rates expected in March 2022.
With a currency pegged to the US dollar throughout the GCC ex-Kuwait, GCC central banks will follow the lead of rising US interest rates to align, thus leading to higher lending rates per the bank and a possible slowdown in loan growth. . Inflation has been a topic of discussion as most GCC economies saw accelerating inflation rates in the fourth quarter of 2021. Overall, an increase in oil prices in oil-rich GCC markets should lead to higher revenues, which will translate into more proactive government spending policies in 2022. . — firstname.lastname@example.org