It’s no secret that the markets have been highly volatile in the new year of 2023. After a tumultuous 2020, many investors are understandably cautious about the future. Fortunately, the outlook is not as bleak as it may seem.
Mark Harries, Chief Investment Officer of Square Mile, has studied the evolution of the markets and has some useful predictions and insights to share. He outlines the state of the markets and dives into the macro outlook of the near future.
Harries notes that equity markets have remained resilient in the face of the many global struggles. Though some outlier events, such as the Suez Canal incident, financially turbulent countries, and rollercoaster-like markets, have made their presence known in 2023, markets have continued to hold up. In fact, the economic rebound has even been quite surprising to many experts.
There have been both domestic and international successes, as well as some slippages. China’s markets, while being subject to some turbulence, have continued to be a standout. Japan’s markets have also been resilient despite the pandemic. The US markets have still been relatively positive despite geopolitical tensions. Markets have stabilized and grown in many countries, particularly those that took proactive measures to contain the virus.
The economic recovery has proceeded with only a few short hiccups, and even those have been quickly quelled by quick-thinking governments. Harries believes that the macro outlook is bright, but there is still an element of risk in the near future. Economic uncertainty still hangs in the air, with many countries starting to hit debt levels that could be cause for alarm in the future.
In the near-term, however, Harries concludes that the global economy is expected to remain strong. Companies may still experience slow growth, but signs of recovery in the markets are everywhere. Debt reduction needs to remain a priority in many countries, but he believes the current framework of fiscal and monetary policies are set to remain stable.
The macro outlook is expected to remain unchanged in the near-term. However, stock markets may still be subject to bouts of volatility. Unprecedented events such as that of the Suez Canal incident, geopolitical tensions, and fierce economic competition are likely to cause short-term fluctuations in the markets.
Harries, however, insists that these dips in the markets must not be feared but understood. He argues that volatility is an inevitable and even healthy factor of stock market investing. With proper risk management and the right strategies, these slumps can be weathered by investors.
Mark Harries has offered a cautiously positive outlook on the global economy and markets in 2023 – one of resilience, strength, and volatility. No-one can know for sure what will happen next, but the insight and analysis provided by this CIO gives a much needed boost of hope for cautious investors.