Opening Note
The first half of 2023 both reaffirmed expectations and delivered shocks.
Headline inflation across the world is gradually easing as expected even though core inflation remains sticky. Global economic growth is also starting to slow. As a result, it is increasingly likely that the global monetary policy tightening cycle is nearing an end, although policy rates are expected to stay higher for longer.
However, we have been confronted with a crisis of confidence in the banking sector that led to the failure of three US regional banks, and outside of the US, the UBS takeover of Credit Suisse. It remains to be seen if banking sector concerns will resurface in the event a crisis unfolds in US commercial real estate, but systemic risk is unlikely.
There has also been disappointment surrounding China’s uneven post-COVID economic recovery, as many had counted on Chinese pent-up demand to support the global economy.
Looking ahead at the second half of 2023, global economic growth may slow further while business and consumer sentiment may weaken. Other uncertainties include the Russia-Ukraine war that sees no near-term resolution, continuing US-China tensions, and whether business and consumer sentiment in China improves.
While economic and geopolitical risks weigh heavy in the near-term, we hope our investment insights will help you forge a strong and resilient portfolio to meet your long-term financial goals.
Winston Lim, CFA
Singapore and Regional Head,
Deposits and Wealth Management
Personal Financial Services
2H 2023 Market Outlook Video
With the global economy weakening, you might be wondering if we are going to enter a recession and how this would affect your investments. Learn how you can fortify your investment portfolio in our 2H 2023 Market Outlook video.
2H 2023 Macro Outlook
With the first half of the year now in the rear-view mirror, two headwinds we highlighted at the beginning of 2023, monetary policy uncertainty and inflation, are likely to be behind us. The US Federal Reserve (Fed) and other central banks are nearing the end of their tightening cycle, and inflationary pressures are gradually easing in the face of a slowing economy. What confronts us now is uncertainty on the economic front, particularly how quickly the global economy slows.
While recent banking sector turmoil is unlikely to trigger systemic risk, we still need to monitor bank credit conditions and the impact on broader economic activity. We also need to be mindful of US commercial real estate risks, as that could affect the banking sector and broader economic sentiment. Other key areas to keep a close eye on are labour market indicators, consumer spending habits, and corporate earnings.
The economic cycle has four clear and inevitable stages. We are now past the peak of the cycle and are in the slowdown phase. It is hard to accurately pinpoint when a recession starts or predict how long it lasts. While economic growth has slowed, recent data suggests a recession is not imminent.
As for recent divergence across stock markets, US and Japan outperforming Emerging Markets and large-cap stocks outperforming small-caps, it is unclear whether these trends will continue or reverse in the coming months. Until it is apparent, hedging uncertainties as a portfolio strategy will be prudent.
Having passed the peak of the economic cycle, build a defensive and diversified portfolio to buffer against possible turbulence in the near-term. This is especially if tighter financial conditions cast a bigger-than-expected drag on economic growth. At the same time, there are still pockets of investment opportunities to be tapped on as the labour market and services sector remain strong.
Source: UOB PFS Investment Strategists.
Start Exploring
2H 2023 Outlook
Learn more about the outlook for major economies, interest rates, stock and bond markets, major currencies and more.
Trending Topics of Interest
Are we entering a recession? Will China be a bright spot? Is the Artificial Intelligence stock rally a bubble? Find the answers here.
What You Can Do
Build a defensive and diversified investment portfolio with Core allocations and capture opportunities as they arise with Tactical allocations.
Our Strategies
UOB’s unique Risk-First Approach helps you build your wealth according to how much risk you are willing and able to take.
Additional Resources
Contact a UOB Advisor
Download a digital copy
Get more investment insights
Credits
Credits
Managing Editor
- Winston Lim, CFA
Singapore and Regional Head,
Deposits and Wealth Management
Personal Financial Services
Editorial Team
- Abel Lim
Singapore Head,
Wealth Management
Advisory and Strategy - Michele Fong
Head, Wealth Advisory and Communications - Tan Jian Hui
Investment Strategist
Investment Strategy and Communications - Low Xian Li
Investment Strategist
Investment Strategy and Communications - Zack Tang
Investment Strategist
Investment Strategy and Communications - Nicholas Bryan Chia
Intern
UOB Personal Financial Services Investment Committee
- Singapore
- Abel Lim
- Ernest Low
- Michele Fong
- Tan Jian Hui
- Low Xian Li
- Zack Tang
- Jonathan Conley
- Alexandre Thoniel, CAIA
- Chen Xuan Wei, CFA
- Chia Hong Wei
- Daphne Chan
- Marcus Lee, CFTe, CMT
- Ivan Hu
-
Malaysia
- Ryan Tan
- Mow Wei Sern
- Thailand
- Suwiwan Hoysakul
- Boonnisaed Thanyaworaanan
- China
- Huang Li Li
- Indonesia
- Diendy
Important notice and disclaimers
The information contained herein is given on a general basis without obligation and is strictly for information purposes only. Such information is not intended to be, and should not be regarded as, an offer, recommendation, solicitation or advice to buy or sell any investment or insurance product and shall not be transmitted, disclosed, copied or relied upon by any person for whatever purpose. Any description of investment or insurance products, if any, is qualified in its entirety by the terms and conditions of the investment or insurance product and if applicable, the prospectus or constituting document of the investment or insurance product. Nothing contained herein constitutes accounting, legal, regulatory, tax, financial or other advice. If in doubt, you should consult your own professional advisers about issues discussed herein.
The information contained herein, including any data, projections and underlying assumptions, are based on certain assumptions, management forecasts and analysis of known information and reflects prevailing conditions as of the date of the publication, all of which are subject to change at any time without notice. Although every reasonable care has been taken to ensure the accuracy and objectivity of the information contained herein, United Overseas Bank Limited (“UOB”) and its employees make no representation or warranty of any kind, express, implied or statutory, and shall not be responsible or liable for its completeness or accuracy. As such, UOB and its employees accept no liability for any error, inaccuracy, omission or any consequence or any loss/damage howsoever suffered by any person, arising from any reliance by any person on the views expressed or information contained herein.
Any opinions, projections and other forward looking statements contained herein regarding future events or performance of, including but not limited to, countries, markets or companies are not necessarily indicative of, and may differ from actual events or results. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person. Investors may wish to seek advice from an independent financial advisor before investing in any investment or insurance product. Should you choose not to seek such advice, you should consider whether the investment or insurance product in question is suitable for you.
We use cookies to improve and customise your browsing experience. You are deemed to have consented to our cookies policy if you continue browsing our site.
