First Quarter 2022
Slowing growth in a mid-cycle expansion
We think the current environment is following a classic investment cycle pattern, which is something we have not seen for more than a decade.
The current cycle is following the pattern that leads us to believe that global economies in 2022 will be in a mid-cycle expansion. This would imply continued growth and economic expansion, growing earnings, rising inflation, rising rates and real assets like property/REITS, and commodities and alpha generators like alternatives. In this environment of rising interest rates, fixed income is likely to face headwinds.
This is a straightforward takeaway from the current cycle and a fairly consensus view. But since investors have not seen a classic cycle in over a decade, we suspect there is a lack of conviction in this view. In the cycle from 2008 to 2019 the growth and inflation environment was very subdued, and it took many years for interest rates to rise and the overall cycle was not in line with classic cycle theory. We suspect this has led many investors to not trust the classic investment cycle and the corresponding investment implications, just as the cycle is looking more classical than it has in a long time. We think investors should have conviction in the investment outlook and not get shaken out by risk on/risk off behaviour that has prevailed in the past decade.
Download the full Quarterly Investment Strategy PDF
This publication shall not be copied or disseminated, or relied upon by any person for whatever purpose. The information herein is given on a general basis without obligation and is strictly for information only. This publication is not an offer, solicitation, recommendation or advice to buy or sell any investment product, including any collective investment schemes or shares of companies mentioned within. Although every reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this publication, UOB Asset Management Ltd (“UOBAM”) and its employees shall not be held liable for any error, inaccuracy and/or omission, howsoever caused, or for any decision or action taken based on views expressed or information in this publication. The information contained in this publication, including any data, projections and underlying assumptions are based upon certain assumptions, management forecasts and analysis of information available and reflects prevailing conditions and our views as of the date of this publication, all of which are subject to change at any time without notice. Please note that the graphs, charts, formulae or other devices set out or referred to in this document cannot, in and of itself, be used to determine and will not assist any person in deciding which investment product to buy or sell, or when to buy or sell an investment product. UOBAM does not warrant the accuracy, adequacy, timeliness or completeness of the information herein for any particular purpose, and expressly disclaims liability for any error, inaccuracy or omission. Any opinion, projection and other forward-looking statement regarding future events or performance of, including but not limited to, countries, markets or companies is not necessarily indicative of, and may differ from actual events or results. Nothing in this publication constitutes accounting, legal, regulatory, tax or other advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person. You may wish to seek advice from a professional or an independent financial adviser about the issues discussed herein or before investing in any investment or insurance product. Should you choose not to seek such advice, you should consider carefully whether the investment or insurance product in question is suitable for you.
UOB Asset Management Ltd Co. Reg. No. 198600120Z
