Q1 returns for investors on the cards: deVere

Yasmine Raso

Senior Journalist, Financial Newswire

12 January 2023

deVere Group chief executive, Nigel Green, has signalled a late-first-quarter “economic ‘peak opportunity’” may be on its way to reward investors who took their chances on riskier assets.

This comes as investors around the world revisit their portfolios and rethink their investments for the year ahead.

“Economic ‘peak opportunity’ might come late in the first quarter,” Green said.

“Until then, unemployment will be rising and there will still be aggressive language from the central banks on the need to stamp out inflation – which by then will be sharply down from current levels, especially as demand for staff is falling fast and this will help ease wage inflation, but it will still be well above the 2% target set by the central banks.

“This is, perhaps, when stocks will reach their cyclical bottom, and when investors might be rewarded for taking the plunge.”

Green also projected a cyclical upturn for risk assets in the second quarter among the Group of Seven (G7) economies.

“The assets that have fallen hardest between now and then may be the strongest performers during this recovery rally, with the best performing days probably at the start,” he said.

“There will be cyclically-sensitive sectors, such as industrials, consumer discretionary and autos.

“[This recovery will probably be triggered by] central banks’ ending of rate hikes, and easing of rhetoric on inflation, as it slowly makes its way down to the 2% target rate in the major western economies, companies cutting back fast, together with signs of economic stabilisation.”

He also maintained the importance of investors positioning their portfolios for as much diversification as possible with assets offering exposure to equities, bonds and alternative classes.

“Holding cash is tempting, but it suggests an ability to ‘time the market’, to invest it at an optimum point in the cycle, and this is nearly always impossible. Investors should be starting to position themselves for the cyclical upturn,” he said.