When I worked in hedge funds, I didn’t see the point in reading outlooks for the following year and barely read any. December was important as it marked performance (and bonus) measurement, but I never saw much point in worrying about forecasts of market levels by year-end and the like. Things have changed, though, as I now do a regular year ahead look for the BBC Radio 4 Today programme. This forces me to think in those calendar year time frames which I honestly prefer to avoid. I thought it was worth writing these thoughts down for this column. No year-end index forecasts or major macro views as I don’t feel I have any particular expertise, but I think there are always some themes which the market has not paid enough attention to. My three key themes to think about as we enter the new year are China, inflation and growth versus value.
China
We shall all need to pay a lot more attention to China in 2022 as three important developments play out. These are: How do Xi’s policies evolve in relation to tech stocks? How will the US-China relationship develop? And what does the Evergrande fallout mean for growth?