Investment Opportunities for 2023

•  Trendspott Team

•  Jan 01 2023
 

After a difficult year for traders and investors in the stock market in 2023, investors are faced with forecasts for lower but more prolonged increases in interest rates by the central banks, a weakening of the dollar and a slowdown in global growth.

Growth stocks are facing difficulties

Inflation in 2022 climbed rapidly in all sectors following the sharp recovery from the Corona epidemic and the high commodity prices as a result of Russia's invasion of Ukraine. Central banks around the world, led by the US Federal Reserve, responded to inflation by aggressively raising interest rates, which in turn challenged interest rate-sensitive growth stocks throughout most of the year.

This trend does not apply to the cyber sector, which enjoys a strong net inflow of funds. The need for data and the protection of critical infrastructures increases in 2022 due to the increase in global risks for cyber attacks against the background of the conflict between Russia and Ukraine.

Opportunities related to climate change

After the supply of Russian gas through Nord Stream 1 was shut off, the energy crisis in Europe led to a substantial shift in the region's priorities for economic development and national security in terms of climate change. The drive for energy independence piqued the interest of European investors, as evidenced by a significant outflow of capital from the cleantech and renewable energy sectors.

Unprecedented agreements to reduce carbon emissions in the energy industry in 2022 were another important step. The European Union launched the RePowerEU program in May with a 300 billion euro investment package to streamline and speed up the switch to renewable energy sources and further investments in cleantech. Inflation Reduction Act (IRA) and other efforts included a 370 billion dollar investment package that the US unveiled in August.

The US launched a 370 billion $ investment package in August as part of the Inflation Reduction Act (IRA) and other programs, in the form of tax credits on investments for companies that create renewable energy projects. At the COP27 annual conference in November, industrialized nations committed to upholding their vow to invest $100 billion year beginning in 2023 to assist developing nations in financing the switch to sustainable energy.

Investment forecast for 2023

The year 2023 may bring in its wings a return to more normal markets driven by economic considerations and not by geopolitics. Global inflation is expected to drop sharply against a background of weaker fundamental effects, resulting from a drop in oil and gas prices at the same time as a global economic slowdown. This may support a gradual return to growth stocks, large public investments in infrastructure, technology and clean energy.

The year 2023 may bring in its wings a return to more normal markets driven by economic considerations and not by geopolitics. Global inflation is expected to drop sharply against a background of weaker fundamental effects, resulting from a drop in oil and gas prices at the same time as a global economic slowdown.

Chinese stocks are starting to get attention

Easing of the corona restrictions, a rescue plan for the real estate market and expectations of an easier policy from the Chinese central bank helped stocks that were evaluated at an attractive value to recover towards the end of 2022. Also the renewal of the dialogue between China and the US following the meeting between President Biden and President Xi Jinping at the summit of G20 contributed to a more positive attitude.

Sectors expected to outperform next year include technology, industrials due to higher spending on security, and shifting consumerism, led by vehicles, electric vehicles and e-commerce. In addition, China's reopening combined with large public investments in the transition to clean energy may further support demand for commodities such as uranium, lithium, cobalt and nickel.

Conclusion

Despite the short-term economic and geopolitical risks, there are trends that will remain intact for several important sectors such as metals related to technological innovation, clean energy and Chinese economic expansion.

Disclaimer: The article does not constitute investment advice or marketing that takes into account the data and the special needs of each person.

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