Opening Note

2023 is expected to start off on an uncertain note as investors eye a potential recession, inflation trends, and global central banks’ monetary policy paths.

Geopolitical tensions will also need to be assessed, with the Russia-Ukraine conflict set to drag on beyond the one-year mark. While things remain fluid over contentious issues such as US-Sino tensions and US semiconductor curbs on China, an amicable meeting between US President Biden and Chinese President Xi at the November 2022 G20 Summit has raised hopes of an improvement in US-China bilateral ties.

Assuming China continues its re-opening path post-COVID, and global central bank tightening slows, the storm clouds may start to break, resulting in a short and shallow recession in 2023. While there are still many variables at play, a greater sense of clarity may start to emerge as we approach the second half of the year.

As volatility is expected to spill over into the new year, steering your portfolios may be challenging. Let our investment insights help you make sense of the noise and build strong foundations for brighter days ahead.

Winston Lim, CFA 
Singapore and Regional Head
Deposits and Wealth Management
Personal Financial Services

Our Risk-First Approach

2023 Macro Outlook

The global economic outlook is set to be weaker in 2023, hampered by high inflation and aggressive monetary policy tightening by major central banks. From a top-down perspective, the main talking point for 2023 is whether global recession risks become reality, and whether the contraction will be shallow or deep, short or sustained. Our view is that any recession will be shallow and short.

2022 was a year of elevated volatility, where simultaneous sell-offs in global equities and bonds left investors with no place to hide from the storm.

Will this continue into 2023, or will we see a return to the negative stock-bond relationship seen in the past two decades?

The long-term trend reveals that stock-bond correlations depend on inflation. Assuming inflation declines over the coming year, a return to a negative correlation should play out, especially if a recession were to hit, as that will benefit bonds. If so, portfolio allocations should become less tricky in the year ahead.

Indeed, we may see some respite in 2023 from surging inflation and aggressive monetary policy tightening. Headline consumer price index (CPI) inflation should generally peak and trend lower owing to a high base of comparison, while the pullback in commodity prices will also help. This should then allow central banks to slow and pause their tightening cycle.

Overall, an uncertain first half of the year may give way to more clarity by the middle of the year, and set up a more conducive backdrop for risk assets in the second half of 2023.

As such, investors may be well served by slowly accumulating risk assets, buying on dips to position for the next upward cycle, with an initial focus on defensive and quality growth stocks.

Start Exploring

2023 Outlook

2023 Outlook

Explore what lies ahead for the economy and global financial markets in 2023.

Trending Topics of Interest

Trending Topics of Interest

Discover key developments that could move markets in the year ahead.

What Investors Can Do

What Investors Can Do

Learn how to build a resilient portfolio consisting of Core and Tactical investments, based on your risk appetite.

Our Strategies

Our Strategies

Find out how UOB’s Risk-First Approach guides you to take the appropriate amount of risk before looking at your desired returns.

Additional Resources

Contact a UOB Advisor

Contact a UOB Advisor

Download a digital copy

Download a digital copy

Get more investment insights

Get more investment insights

Credits

Credits
chevron
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
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
    • Christine Ku
    • Daphne Chan
    • Jaime Liew
    • Shawn Tan
    • Marcus Lee, CFTe, CMT
    • Ivan Hu
  • Malaysia
    • Joel Tan
  • Thailand
    • Suwiwan Hoysakul
  • China
    • Huang Li Li
  • Indonesia
    • Diendy

The information contained in this publication is given on a general basis without obligation and is strictly for information purposes only. This publication 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 in this publication 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 in this publication, 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 in this publication, 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 in this publication.

Any opinions, projections and other forward looking statements contained in this publication 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.