Q&A January 2022

• One of the big stories in the latter half of 2021 and the start of this year was the return of high inflation, especially in the US and other developed countries. Do you believe central banks “have this one covered” or will a more forceful policy response be required?

  CH: I suspect central banks have it covered and in 12 months, we’ll be looking at much closer to normal levels of inflation.

  RC: Inflation may well prove stickier than expected, with upside risks until the second half of this year, but I would expect US headline inflation to ease closer to the Fed’s 2% target by the end of 2022. Central banks have allowed economies to run hot for some time, so there is always a risk that they may over-react on interest rates given that monetary policy has lagged the economic recovery. Although higher interest rates are on the near-term horizon, these have been well signalled, with the market expecting up to four rate hikes of 0.25% each in the US this year starting in March and up to another four hikes in 2023. With an anticipated moderation in inflation later this year, I do not see a need for a more hawkish scenario or monetary policy to become restrictive in 2022, but it will close the gap with the economic and investment cycle. Interest rates will remain low by historical standards over the next two years – so a tightening in policy, but not tight monetary policy.

  JW-E: They (central banks) are catching up. But the market is in danger of pricing in too much tightening. Supply chains will settle down and talk of “Roaring 20s” demand is overplayed.

  BK: A more forceful response called for, however it will take time to reset inflation.

  BS: I believe they do have it covered. The Fed’s rhetoric has been quite forceful and the market has taken note. Some inflation may be unavoidable though due to the dynamics around energy transition.

  BSE: I believe that inflation is largely due to temporary supply side issues around supply chains and that inflation is isolated towards certain goods sourced from particular countries and I also believe the central banks are watching carefully and will react reasonably in response to extended supply side shocks.

  ZD: Central banks are in unchartered territory; this is not like any other cycle given the much higher inflation, the unique uncertainty about the implications of the pandemic on supply and demand, and the amount of stimulus that was pumped into the market. Added to that mix is the poor track record of central banks to engineer a soft landing in normal environments, and this is a unique environment.

• Based on your view, what implications does this have on the various asset classes over the coming year?

  BS: I think its going to be a bumpy ride and different geographies and asset classes will have different experiences. I do think the growth-at-any-price trade is over. I think common sense will prevail and valuation and cash flow will matter again. There are still pockets of opportunity globally. I prefer emerging market equities and debt, and within developed markets, I prefer UK and Europe over the US, although in times of crisis we can generally expect a rally in US government bonds.

  BK: I’m more wary of bonds than equities. Rising short rates make US cash more attractive.

  CH: Inflation cooling will be quite helpful for risk assets in general, but we need to be cognisant of the very high multiples that developed market equities already trade on. A decline in inflation is more likely less of a headwind than a tailwind.

  JW-E: I see bond yields a bit higher, and some equity derating, especially the speculative stuff.

  ZD: While the volatility seen in the first few weeks of 2022 will continue in the short-term as markets digest policy normalisation accompanied by “quantitative tightening” and discern winners from the losers, such an environment provides opportunities.  So-called long-duration assets, such as growth assets whose cash flows are long-dated, will be the most impacted. Added to that will be the pain associated with high valuation stocks. Certain value segments are likely to be better rewarded by the market than others, such as financials and those associated with rising commodity prices, as the rotation out of growth into value plays over the course of the year.

  RC: Despite rising real rates and bond yields, these will remain low relative to history and should not move into restrictive territory for equity. Firmer inflation implies a bearish outlook for developed market government bond yields which currently offer limited diversification benefits and we prefer inflation-protected bonds. Corporate bonds and equities have outperformed in the first year of past Fed rate hiking cycles and this should be the case again, although performance is likely to be choppy. Elevated inflation and geopolitical risks will likely sustain some demand for gold as a hedge but rising real yields and rates are a headwind.

  Longer duration equities with more distant profit streams are more sensitive to changes in the discount rate so some of the previous high-flying growth stocks and certain technology companies will likely struggle on a relative basis. Conversely real assets like commodities, energy, materials, and banks should perform better in a high inflation, higher yield world.

  Historically, sectors like consumer staples, utilities and real estate have tended to struggle in a rising yield environment. But, more recently, companies with sustainably high and growing dividend yields have no longer been trading like bond proxies, but have exhibited positive correlations with changes in bond yields as investors seek more income protection in a higher inflation environment. I would also expect quality companies that have pricing power to do well. As the cost of capital and interest rate uncertainty increases, we should see more volatility than normal in the year ahead, some mild PE valuation compression, and more muted, yet still positive, equity market returns.

  BSE: High inflation will be good for inflationary linked assets such as inflation-linked bonds, gold, select commodities, consumer goods related equities.

• US politics looks as fractious as ever. President Joe Biden has set out his stall with his ambitious “build back better” expenditure programme, but could face obstacles if the Democrats lose either or both Houses later this year. How do you see US politics unfolding in 2022 and what impact could this have economically?

  BK: I see the Democrats losing enough seats to lose Congress. Spending programmes will then have to be much less ambitious and this may improve the fiscal outlook.
  

  JW-E: The Democrats will lose both houses and this will mean legislative gridlock for two years – probably just as well as we don’t need more “stimulus”. It will be interesting to see if former President Donald Trump is finally tried for some of his alleged misdemeanours. But the US political situation looks as fractured as ever, and various voting reforms suggest a high chance of a GOP win in 2024. Who will it be?

  RC: Some spending plans particularly around the green transition will still likely be forced through. Fears around anti-trust laws and increased regulation on the Technology sector, which have been an overhang, may wane. The Democrats may also struggle to put though wholesale tax increases this year.

  ZD: The size of the US$1.75 trillion expenditure plan is likely to be substantially reduced, if passed at all, given the pushback from the Republicans who argue that the stimulus has done a bit too much, with inflation hurting the average American. Even among the Democrats, concerns have been voiced about the size of the proposal – they argue it could add to the rising debt and worsen inflation. This presents a challenge for the Democrats as they look to retain their majority heading into midterm elections. The Democrats could face blowbacks, as it appears they are not coming through for their voters. The US economy is running hot as it is, so the failure to pass the package will not derail the current economic path.

  BSE: I do not see any major negative economic reforms in the US due to midterms later this year. It could mean fewer rate hikes than expected, which would be positive for stocks.

  BS: Very difficult to predict, as there are potential crises on the horizon (Russia/Ukraine) and, depending on how Biden manages these, these will determine support for him and the Democratic Party.

• Let’s contrast the above with China, which by its own high growth standards lagged in 2021. What does 2022 look like for growth in the world’s second largest economy? What does this mean for the rest of us?

  RC: The Chinese economy is somewhat counter cyclical. The deceleration in China's economic activity over the last six months is now likely behind us, and with a more favourable Chinese monetary policy backdrop, we should see some property market stability while credit concerns can be expected to be contained. The overall global supply-demand outlook for commodities remains robust, which is positive for South Africa. Chinese consumer facing and service-oriented tech companies came under intense regulatory scrutiny and pressure last year in the drive for ‘common prosperity’, but valuations are now more palatable. While (some of) this regulatory pressure could ease somewhat in 2022, proactive fiscal policy stimulus towards infrastructure and fixed asset spending may renew the focus on the old economy, relatively favouring China’s manufacturing and industrial sectors this year. I would expect Chinese GDP growth of around 5% this year, which is likely to become the new normal level.
  

  CH: Unlike the US, China has space for monetary policy action given its much lower levels of inflation. Renewed stimulus is likely to see an uptick in Chinese activity in the first half of this year, which will be very helpful for commodity prices, resource stocks and commodity exporting countries in particular.

  JW-E: I see it bottoming out, with increased stimulus and more focus on consumer demand. Ending the zero-Covid policy will help. I think China is neutral for the rest of the world in 2022.

  ZD: The Communist Party’s ambitions for China to become the largest economy in the world around 2030 can be expected to desynchronise China’s policy response from global policy normalisation as Chinese policymakers continue easing. While these actions will be supportive for growth, the zero-Covid policy and ambitions to achieve the common prosperity agenda could sacrifice some growth in the short term. In the medium to long term, the common prosperity agenda is pro-growth as it should boost consumer consumption, therefore, net-net China’s macro-outlook is positive. Growth in China will be supportive for emerging markets, in particular for commodity exporting countries such as South Africa.

  BK: The key question is whether the Chinese slowdown is structural or cyclical. I think the structural trend is for slower growth. China will add stimulus – which will be useful for our metal and mineral exports and hence critical for SA prospects.

  BS: Also a bumpy road; China is managing its own crisis (Evergrande) and seems intent on ensuring investors and speculators understand that there are repercussions for poor financial decisions. While I don’t support many of China’s policies, it does sometimes have a more sensible approach than the US.

  BSE: The shape of Chinese growth continues to change. Following Evergrande, perhaps there will be less spend on infrastructure-related activity and reduction in China’s reliance on global exports and pushing for a continued shift towards a more consumer driven economy.

• Staying with China, the government there has been flexing its muscles, both when it comes to its interventions in the private sector, and on the geopolitical front (Hong Kong, Taiwan). How do you see this playing out in 2022 and what does this mean for investors?

  ZD: The clampdown on what President Xi Jinping calls disorderly capital is likely to continue in 2022 as he pushes to make good on his pledge to make "solid progress" towards common prosperity  by 2035.

  The Chinese government claims that it has achieved a moderately prosperous society and the natural next step is to target common prosperity. While the government has made it clear it does not want to rob the rich and it will continue to support the private sector, it wants to level the playing field in order to create a big middle class, which will provide a relatively stable social structure that will be beneficial for boosting consumption.

  Market participants view this as a return to the traditional socialist agenda, which poses the risk of suffocating entrepreneurship and innovation. As the antitrust net was cast across multiple industries in 2021, some deemed China uninvestable. The uncertainty that comes with the implementation of these antitrust laws could continue in 2022 and depress valuations in the Chinese market.
  

  BK: The totalitarians see opportunity in US weakness. I don’t believe Biden is up to the task of deterring them.

  CH: I suspect the most likely outcome is more of the same – gradually escalating tension building between China and Taiwan, with all eyes on the 2024 Taiwan election.

  BSE: Taiwan remains the biggest concern given that more than half the world’s microchips come from the island. It could be a geopolitical chess piece for the year ahead, given the world’s insatiable demand for chips.

  BS: I don’t expect any action in the short term but I do expect the sabre rattling to continue, which will add volatility to markets.

• On geopolitics, relations between the West and Russia have deteriorated considerably. How do you see this unfolding in the year ahead?

  RC: Tensions have been escalating, with an invasion of (some of) Ukraine a distinct possibility and the room for negotiation having narrowed. NATO and the West have promised that any incursion would be met with retaliation in the form of financial sanctions and export controls, including measures to cut off banking and payments access, restrictions on access to tech supplies, and preventing the operation of gas pipelines.

  Russia’s response could include restricting European access to natural gas and cyber-attacks. This would present an upside risk to energy prices, exacerbate Europe’s current energy crisis and harm European economic conditions and risk assets.

  Russia is a large supplier of PGMs and metals such as nickel so their prices would be underpinned. The US dollar and US equities generally outperform in an elevated risk environment, given their relatively defensive nature. Even if there is no immediate war, Putin is likely to keep pushing the boundaries as he seeks to test the resolve and unity of the US, Europe and NATO.
  

  JW-E: Putin would be nuts to invade Ukraine, but who knows? The gas pipeline blackmail is a strong card, but sanctions are worse. The west needs to find a way to make him look like a winner to his own citizens, while offering him nothing.

  BK: Russia will keep pushing – it wants to be a global power and recreate its empire. Europe and Germany in particular are compromised by energy needs.

  CH: Deteriorating materially. Further escalation will see a surge in energy prices, at least temporarily until other supplies from the US/Saudi Arabia can start to pick up the slack. There is also risk for food price increases, given how much wheat both Russia and Ukraine export. Potentially there’s some upside for the PGM basket too.

  BSE: I see a lot of lip service, with little follow through – nobody wants to go to war.

  BS: I think Putin is unpredictable and dangerous, so anything is possible. He has potentially engineered an energy crisis and left Europe in a dangerous position in terms of energy security. These moves limit the west’s responses to an invasion of Ukraine.

  ZD: Russia is one of the largest producers of commodities such as natural gas, oil, aluminium, PGMs and wheat. Any escalation and therefore disruption in exports could elicit an oil price shock and rally in commodity prices. While this poses a risk of further inflation, commodity-exporting countries will be beneficiaries of a rally in commodity prices.

  Economies have become so inter-linked though that the efficacy of sanctions is questionable. It will be difficult for some NATO allies to impose strict sanctions on Russia without hurting their own economies. Geopolitics are often guided by heads of states’ personal ambitions thus making them difficult to predict.

• Based on all of the above, what are the implications for the different asset classes – equities, bonds, currencies and commodities?

  BS: In the short term, anything is possible but ultimately our greatest crisis is climate. Trillions of US dollars are due to be spent in coming years on existing and new renewable energy /decarbonising opportunities. Regulation is advancing and there is pressure from all sides for companies to reduce their emissions to net zero by 2050. This will ensure strong pricing and investment in the commodity space, which I believe will be good for many commodity exporters who have the correct commodity mix.
  

  CH: Given elevated starting multiples, it’s hard to be optimistic about global equities, especially given tightening monetary policy in the US. Global bonds are also facing some risk – rates are still below where we consider to be fair value. The net result is a year that is likely to be characterised by weak returns.

  JW-E: More volatile but ultimately sideways-ish. I see a “green bid” for some commodities.

  BSE: In spite of rising interest rates, the absolute level [of rates] will remain relatively accommodative and still provides a supportive environment for equities. However, the long duration midcap tech stocks, which are still losing money, will continue to trade lower, and this could provide some really attractive opportunities for savvy stock pickers. Developed market bonds still seem avoidable to me, while emerging market bonds are more attractive on a yield basis.

  ZD: Despite the headwinds, there is a lot of cash on the sidelines in money market funds (almost US$5 trillion), which could be the dry powder that fuels the next leg up in risk assets. With rising inflation, cash is negative real yielding and the relative returns in fixed income are too low which still makes the case for overweight equities positioning.

  To hedge against inflation, an allocation to commodities is warranted.
  A couple of indicators, such as global growth, potential rotation out of expensive US equities point to a weaker dollar in 2022.

  Despite the strong global inflation data and rising expectations for monetary tightening, all central banks seem to have been out-hawked by the Fed, with rising Treasury yields at the short end providing a further impetus to the dollar, which is trading near highs of June 2020. Added to this is the potential volatility from geopolitical risks, inflation and oil price shocks, which would be supportive for the dollar given its safe-haven status.

  BK: Bullish on commodities, neutral on equities and cautious of developed market bonds. Lots of money is on the sidelines that could sustain demand for goods, services and assets.

  RC: Above trend economic growth, which supports earnings, and improved valuations after January’s sell-off, still favour equities for the year ahead. So, I expect equities and commodities to outperform cash, bonds and fixed income in 2022. But I expect more modest single digit returns from equities, muted returns from other asset classes, as well as increased volatility this year – it’s going to be a bumpier ride.

• Turning to South Africa, what does the above imply for the South African economy and for local markets?

  BK: The saving grace for us could again be metals and the trade balance, leading to rand stability. Growth, not inflation, is our problem and I wish the Reserve Bank would recognise this. Containing government spending will be very important and getting investors to believe it, would be very helpful.
  

  RC: A stronger-for-longer commodity outlook is positive for the South African economy. Inventory restocking, positive terms of trade and a revenue overrun at Treasury are also tailwinds and should help the local economy grow at around 2% this year. But the electricity constraint, structural decline in productivity, high unemployment, high public debt, fragile confidence after last July’s civil unrest, and government’s inability to implement proactively and meaningfully the much-needed economic reforms will likely cap future growth prospects at a pedestrian sub-2% level.

  South African equities are cheap on both an absolute and a relative basis, with scope for some re-rating potential, notwithstanding a rising rate environment, and are likely to generate mid-teens returns in 2022, led higher by resource and bank stocks. The rand is seasonally stronger at the beginning of the year. But as concerns kick in about the longer-term economic growth potential, fiscal austerity or consolidation, US rate hikes and uncertainty surrounding the ANC December election later this year, I would expect the rand to weaken.

  CH: Higher commodity prices will be beneficial for the South African economy but this needs to be offset against the prospect of higher rates in the US, leading to a general risk-off sentiment. In addition, South Africa has the headwind of another likely round of load shedding come winter. Having said that, expectations for growth are very low and it will not take much for South Africa to surprise on the upside.

  ZD: South Africa, as an open economy and an emerging market, is impacted by the global macro situation. China’s continued policy support, inflation and the potential inventory builds of autos as global vehicle production recovers, will be supportive for commodity prices and as such, South Africa’s terms of trade should hold up in 2022.

  BSE: South Africa seems to be in a fortunate space where it collects tax revenues from the global miners, a situation which has been, and will be, very helpful to tax revenue collections and the rand. More concerning is the high level of unemployment and more so, the youth unemployment rate. Local markets will be driven by global consumer defensives with pricing power (eg. tobacco), the ongoing push towards green economy metals (positive for the miners) and undervalued mid and small caps.

• 2021 was a difficult year for President Cyril Ramaphosa’s government, with the civil unrest in July and the poor local government election performance standing out. How do you see him tackling the key challenges (electricity, employments, etc)?

  BK: The challenges are large and his party is divided. He is likely to be re-elected as head of the ANC – but this outcome is not certain. The alternatives are almost too ghastly to contemplate. Simply getting the direction of change half-right offers great upside.
  

  ZD: The factions and focus on the so-called unity within the ANC diverted the party’s focus inward in 2021 and as such it stayed out of touch with the people. Ramaphosa, who was the hope, has been pre-occupied with renewing the ANC. As such, the party stayed out of touch with the people, and there has not been a visible change for the average voter in terms of employment and service delivery, and it is stalling much of the needed structural reform. The patience of ANC supporters has worn off, as evidenced in the municipal elections.

  CH: I see very gradual but consistent improvement. We’re only now seeing how bad the damage was in the state capture era and presumably there are still a number of players with vested interests that will obstruct any improvement. The pendulum is swinging in the right direction, even if more slowly than most would like.

  BSE: With a lot of lip service and slow delivery – unfortunately South Africa has created a system where grants have become the norm and expected. It’s very difficult to change that.

  BS: He moves slowly but surely (too slowly for many of us), but I am optimistic he will make some meaningful and desperately needed changes ahead of the ANC conference later this year.

• Which are the markets / geographies to watch in 2021? Developed or emerging markets?

  RC: This will depend on whether interest-rate normalisation pans out as currently expected, whether there is sustained ‘risk-on’ appetite, and if geopolitical trouble spots turn into actual armed conflicts. Assuming an orderly rate hiking cycle, continued above trend global economic growth, and no major wars, then emerging markets should outperform developed ones ,with Europe to lead the latter. Easier liquidity and a policy backstop, together with improving earnings momentum, should result in Chinese stocks leading emerging markets in 2022 in a reversal of last year’s form.
  

  BK: There is a case for emerging over developed markets on a valuation basis, South Africa included

  CH: Emerging markets. They’re much cheaper than developed markets and earnings and dividend growth has been strong. South Africa is particularly interesting, given how low the bar has been set.

  JW-E: Emerging markets’ time will come if the US dollar weakens, but I’m not betting on it.

  BSE: Both. As developed markets derate, it will provide good opportunities in quality, oversold businesses and the overlooked, stable emerging markets will prove to be good investment opportunities.

  BS: Emerging markets and, within developed markets, the UK.

• What are the sectors to watch? Look at cyclicals vs defensive, growth vs value, offshore vs local, industrials vs resources, bonds vs equities, tech, etc.

  CH: Metals and mining – the energy transition is very metal intensive and miners have shown unusual production discipline, suggesting higher prices ahead.
  

  Developed market banks – It’s been a long time since we saw developed market long bond yields sustainably increase and this is an environment that is very helpful for developed market banks (and damaging for ‘growth stocks’).

  This also implies value over growth. The combination of rising long bond yields and disappointing US growth is one that is very helpful for value over growth.

  BK: Look for companies with outstanding long-term prospects. Resource companies appear underappreciated to me.

  JW-E: The short-duration stuff should do better to begin with, but you sell out of long-term growth assets at your peril. This is where the real compounders are. Value is a mean reversion trade, at best.

  BSE: Consumer defensives with strong pricing power, both growth and value (the distinction is losing many of its default settings – company can be both growth and value). Offshore, given the long-term deterioration of the rand. Resources with a long-term time horizon, given major supply shortages in key green economy metals.

  Equities still look like the better asset class relative to bonds. Some of the large- cap tech names are some of the best businesses that have ever been created, with highly scaled and cash-generative business models and strong balance sheets. Many large-cap tech names are not that expensive considering the quality of their cash flows.

  ZD: While technology stocks are at high valuations and will be hurt by high interest rates, these companies have long-term structural tailwinds, are cash generative, and have the potential to grow earnings ahead of the market. “Buying the dips” on any pullback or correction could pay off, once the extreme positioning and sentiment settles.

  BS: Given current geopolitical developments, I think defensives in the short term, but cyclical and value in the medium to longer-term. I always believe in being diversified across developed and emerging markets. Life is unpredictable.

  RC: Equity markets have travelled well, and absolute valuations are expensive versus long-term averages, but the current low level of real yields justifies high equity valuations. Equities are cheap relative to bonds, growth at this point offsets the risk from higher equity multiples, and the earnings backdrop is supportive.

  The post-pandemic re-rating for equities has now been almost completely erased after January’s drawdown, with PE valuations only marginally higher than their pre-pandemic level, despite now stronger economic fundamentals and much lower rates. There could be some further rotation into value and non-US equity markets over the next few months.

  Globally, we have been adding to select positions in materials, banks, and infrastructure related beneficiaries. But, after January’s market sell-off some growth stocks now look oversold with improved valuations and could bounce near-term. Historically, quality has outperformed value when the VIX barometer of volatility rises. So, the opportunity may be in cheaper quality stocks with low variability in earnings and dividends. We like select consumer recovery or ‘reopening’ counters within the services sector, which has lagged for some time.

  The pandemic drag should diminish and mobility should improve, translating into pent-up consumer demand and spend to come from excess savings. Healthcare stocks are our preferred defensive play and we prefer US dollar cash as an insurance policy over global government bonds.

• What are some of the other trends / themes we should be keeping an eye on in 2022 that could have an impact on investment?

  JW-E: I think both cyber (including cybersecurity) and the metaverse could be rewarding, from the right level. Environmental, social and governance (ESG) will have started underperforming, with tech sliding, which will furrow a few brows. I think that blind acceptance of ESG as a passport to “doing good and making money” will be challenged … and that could open up some opportunities. Is hydrogen the internet of this cycle? It probably still has to fall a bit more, but it could be huge.
  

  RC: After January’s sell-off, I would be opportunistically nibbling at select reasonably valued eCommerce, cyber-security, and cloud stocks in the technology sector. Consumer services counters within the travel and leisure space could recover well.

  Some exposure to diversified miners at the forefront of the green energy transition, may also be justified. Of the major long-term structural growth investment themes, expect more exciting developments in the virtual reality, augmented reality, artificial intelligence and metaverse space, as evidenced by recent developments at Meta Platforms (Facebook) and Microsoft, to mention just two.

  CH: ESG and the impact on commodity prices.

  The rise of central bank issued digital currencies leading to a more aggressive regulatory stance against crypto currencies.

  Onshoring of production. Manufacturers have been scarred from supply chain disruptions and will likely respond by onshoring, where feasible. This implies some upward pressure in prices over time.

  The relaxation of inflation targeting. The focus has clearly shifted to growth and I suspect this might stick.

  ZD: Millennials and Gen Z have taken the reins of their own investments and relate to digital assets such as non-fungible tokens (NFTs), cryptocurrencies and meme stocks. Given this, NFTs should continue to find favour among certain segments of the market in 2022.

  BK: The differentiator will remain how well companies manage the data available to them - the opportunity is large .

  BSE: Exchange-traded fund (ETF) flows will be a key one to watch (in and out), having a disproportionate impact on market moves causing mass volatility.

  BS: I agree with Larry Fink (CEO of BlackRock) who recently said the next 1,000 unicorns worth US$1bn would be in climate technology.

• What would be your “Grey Swan” events for 2022 – defined as events with a very low probability but a big impact (black swans by definition cannot be assigned a probability at all)?

  RC: I see three potentially. Firstly, three wars on different fronts – Russia invades Ukraine, China attacks Taiwan, and Israel strikes Iran. Secondly, a new global health pandemic brought on by a vaccine resistant Covid derivative. And finally, a global cyber-security attack launched by Russia and / or another pariah state.
  

  CH: Chinese escalation with Taiwan; the Fed only hikes twice; US inflation drops to 2% by year end.

  JW-E: Cyber-attack; the “wrong” President in France; another, much worse Covid variant; Everton are relegated from the EPL!

  BSE: US Fed reverses course on aggressive rate hikes and only hikes rates 25-50bps for the year and maintains its relatively easy monetary policy, as supply chain issues ease and inflation moderates. US markets continue to charge higher in spite of record high valuations. The world reverses its course on green energy – coal and nuclear power stations resume operations at a record pace to fend off higher energy prices.

• Disclaimer

  Although information has been obtained from sources believed to be reliable, Investec Securities Proprietary Limited (1972/008905/07) or its affiliates and/or subsidiaries (collectively “ISL”) does not warrant its completeness or accuracy. Opinions and estimates represent ISL’s view at the time of going to press and are subject to change without notice. Past performance is not indicative of future returns. The information contained herein is for information purposes only and readers should not rely on such information as advice in relation to a specific issue without taking financial, banking, investment or other professional advice. ISL and/or its employees and/or other Investec Companies may hold a position in securities or financial instruments mentioned herein. The information contained in this document alone does not constitute an offer or solicitation of investment, financial or banking services by ISL. ISL accepts no liability for any loss or damage of whatsoever nature including, but not limited to, loss of profits, goodwill or any type of financial or other pecuniary or direct or indirect or consequential loss howsoever arising whether in negligence or for breach of contract or other duty as a result of use of the reliance on information contained in this document, whether authorised or not. This document may not be reproduced in whole or in part or copies circulated without the prior written consent of ISL.

  Investec Wealth & Investment, a division of Investec Securities Proprietary Limited, registration number 1972/008905/07. A member of the JSE Equity, Equity Derivatives, Currency Derivatives, Bond Derivatives and Interest Rate Derivatives Markets. An authorised financial services provider No.15886. A registered credit provider registration number NCRCP262.