Luminor expects a rather positive year for pension funds

However, according to him, 2023 cannot be described as a period of stable and constant growth. “The year 2023 began with a relatively unexpected cooling of the Chinese economy, which significantly affected the growth expectations of the global economy. The increase in interest rates by central banks was also sharp and “In retrospect, we see that only a few dared to predict that interest rates would rise so much in such a short period of time,” Madisson said in the press release.

While stock markets recorded two strong ups and downs during the year, one in spring and the other in mid-summer, on both occasions the rise was followed by a rapid fall. “The markets expected that the increase in interest rates was now over and that the central banks would start the transition period in the direction of a lowering, but both times this expectation was still premature. The harsh monetary policy continued and the markets had to correct downwards again,” he explained.

The third rise in the stock markets also occurred in November. “It seems that the slowdown in inflation is a strong trend in major economic regions, which allows central banks to become a little softer in terms of monetary policy. There is more chance than before that interest rates can finally be lower next semester,” Madisson predicts.

In 2023, financial markets have also been greatly affected by the artificial intelligence or AI revolution. “When this technology was released for mass consumption in the spring, it sent stocks in the technology and communications sectors soaring, and these two sectors have grown much faster than the others this year,” the fund manager said bottom.

To the extent that 2023 could be characterized as an upward push, fund manager Luminor predicts that 2024 could bring the expected relief to markets. “If inflation slows to the expected pace, central banks may make the expected interest rate cuts in the middle of next year. Therefore, there is an expectation that the economic environment will improve for companies, which will allow new development plans, invest more and revive the economy,” said Madisson.

The risk is the historically frequent episodes in which central banks prefer to keep interest rates too long and too high, arriving late in changing rates and causing a sharp decline in the economy. “It may be that the first half of 2024 is more of a period of good news expectations, but if the effect of high interest rates lasts too long, losses could manifest themselves in the second half of the year,” Madisson explained.

However, the fund manager believes that the start of the year will promise positive developments. “I believe that the investment classes will have a good year, the sudden collapse of the global economy will be avoided and interest rates will decline, which will create a favorable environment for the markets,” he concluded.

2024-01-03 16:13:51
luminor-expects-a-rather-positive-year-for-pension-funds