StashAway Market Outlook for the rest of 2022

Hi everyone, StashAway recently held its market outlook for the rest of 2022 virtually. This was moderated by Albert, our deputy country manager in Malaysia, and was led by Stephanie, our Co-Chief Investment Officer. Here are some takeaways from the evening -

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What’s happened since the start of 2022 :

1. Bonds and equities have both slumped this year, which is a rare occurrence. This was largely due to a combination of high inflation and aggressive Fed rate hikes.
2. Tech valuations have undergone a huge reset. The Nasdaq Composite Index is now back down to its 20-year average.
3. Fed rate hikes have lifted the USD to its strongest level in 20 years.

Looking ahead :

1. The big question now is whether the Fed can achieve a “soft landing”. That would require two things: easing inflation and a mild economic slowdown.
2. On the former, a stabilisation or easing in commodity prices would suggest a downward trajectory for US headline inflation in the months ahead.
3. On the latter, the labor market and other data suggest the US economy is still showing resilience - suggesting it isn’t quite in a full-blown recession.
4. Even so, leading indicators show that we’re not out of the woods yet. Inflation is stabilising but will likely remain elevated , and growth is still slowing.

Risks we’re watching out for :

1. Increasing geopolitical tensions between the US and China has the potential to roil markets.
2. Skyrocketing energy costs in Europe - due to its heavy reliance on Russia for gas - are damping its economic outlook. It will likely be strained further as winter approaches.
3. Rising US rates and a stronger USD are lifting borrowing costs for emerging markets, putting some at risk of default.

If you would like a more in depth explanation of these points, please feel free to watch the recording of the webinar here - https://www.stashaway.sg/r/market-outlook-rest-...

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If you have any questions for the team, or would like to share your opinions with the team regarding your own personal outlook, feel free to reply in this thread or reach out to us at [email protected].