Standard Chartered called 2023 a «roller coaster year» for financial markets, highlighting three lessons learned from a turbulent experience.
Despite the plethora of worries to start the year, such as recession risk in the US and Europe as well as geopolitical tensions and an economic slowdown in China, investors still managed to make gains by adopting a traditional portfolio management approach, according to a note by Standard Chartered. «At face value, the vagaries of the market may seem daunting,» said senior investment strategist Rajat Bhattacharya in the note.
«However, those who followed some of the time-tested investing principles have been well rewarded. For instance, our 'Balanced Asset Allocation' strategy has risen [around 7 percent year-to-date], which would count as an average year for long-term investment returns.»
Three Lessons
According to Bhattacharya, there were three lessons learned from what it called a «roller coaster year» for markets.
Firstly, it reiterated the need to stay invested, citing reduced performance this year by those who decided to sell their equity holdings at the start of the year. Secondly, stay nimble to take advantage of tactical advantages to generate alpha. Thirdly, stay calm by «ignoring market mood swings and staying disciplined».
Near-Term Outlook
Heading into 2024, Standard Chartered is optimistic about markets should three conditions be fulfilled: no significant deterioration of economic indicators, no robust pushback against the market’s rate expectations by Western central bankers, and no surprise rate cut by the Bank of Japan.
«Our indicators do not suggest excessive exuberance or significantly crowded investor positioning across major asset classes. Hence, we see scope for the prevailing market sentiment to persist in the coming weeks, provided three factors hold,» Bhattacharya added.
