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What IC writers are looking out for in 2022

What are the key themes the Investors' Chronicle's writers are looking out for in 2022?
January 4, 2022
 

From blockchain to investment trusts to Vietnam, our writers reveal what they are looking out for in the 12 months ahead... 

Rosie Carr

These are tricky markets, we remain in the grip of a pandemic and stemming from that are multiple issues which are generally not good for business, such as supply chain difficulties and inflation. Even with further rate rises from the Bank of England, and in the US next year, inflation will stick around, and these issues mean that margins will be under pressure for a lot of companies. However, many analysts feel confident that earnings will stay positive and 2022; positive but muted. We should expect market turbulence to continue and investors really should be looking for quality companies with resilient earnings - the problem is you have to pay through the nose for that. It's a question of being diligent in your research and having conviction in your holdings beyond all the current noise.

Dan Jones

A big event for me in 2022 is how the economic policy mix develops in the UK. Now that might sound quite dry, but I think there is the potential for some pretty unusual outcomes now that inflation has backed policymakers into a corner. Base rates have started to rise, the near term outlook is rapidly dimming, and we've got to bear in mind as well that some fiscal policy support will be removed next year. At the same time, inflation is looking pretty sticky, not least if the Omicron variant causes more supply chain issues. So we could be looking at a high inflation, low growth environment in the UK in 2022. 

Dave Baxter

Investment trusts have been enormously popular this year, raising 14.3 billion in the first 11 months of 2021. That's the highest level we've seen in 13 years. Many of these names operate in popular areas like renewable infrastructure, and their shares, in many cases, trade on big premiums to the value of underlying assets. I'll be watching these names carefully see if they'll take longer than expected to put all of that new money to work. If they do, we might see share prices come off and see them trade at more attractive prices.

James Norrington

I'm really interested in following what developments there are in blockchain in 2022. You have all heard of crypto markets, and it's a bit of a wild west, but the underlying technologies are really fascinating. We're already seeing certain banks using blockchain technology to help settle and verify transactions. I think this could be a big growth area for the next 10-20 years.

Algy Hall

One thing I think may be particularly interesting next year is how the accounting for sustainability develops. Last year we saw the IFRS, the main International Accounting Board, take on the work of a number of different organizations in an attempt to really put a number on a lot of the sustainability issues which we are seeing companies address more and more. This could really alert investors to the externalities faced by many different companies in these areas, and also quantify the risks.

Mary McDougall

Vietnam, I think, is one of the most interesting investment regions. It's got a huge young dynamic workforce and is one of the fastest growing economies in the world. It's also benefited from companies diversifying their supply chains from China. It's not that easy for investors to access, but there are three investment trusts: Vietnam enterprise investments, Vietnam holding fund, and Vietnam opportunities fund. They've all done very well in 2021 but I'm interested to see what they'll do in 2022.

Alex Newman

2021 was another strange year for UK property - house prices rocketed again, and you'd have been hard pressed to lose money from a real estate investment trust. Even house builders finished in the green, despite rising investor concerns about inflation, supply chains and the end of Help to Buy. In 2022, it's hard to see how the rise in property valuations can continue at the same pace, and so broadly. It will probably pay for investors to be more selective and lower expectations for returns.

Alex Hamer

I'm going to see how Shell and BP go with energy transition plans. Obviously, we've had the call for Shell to be broken up into the green company and a less-green company - I don't think that will happen. But we'll definitely see more focus on their hydrogen carbon capture projects, which are worth billions and billions of dollars. And right now we're not clear on what those returns are going to be.

Jemma Slingo

I'll be keeping an eye on what city law firms are doing over the next 12 months. Recent research suggests there might be a slew of legal listings in 2022. So it'll be interesting to see if they actually materialize. And if they do, what does that mean for investors? One interesting area to look at might be whether partner interests and shareholder interests can ever truly align. I'm also curious to see how the relationship between listed litigation funders and solicitors firms develop over the next 12 months.

Oliver Telling

Young, reckless, and persistently bullish. From crypto bros to Wall Street batch traders, 2021 introduced the world to a different type of investor. Each meme stock cryptocurrency may come and go, but this new generation of traders is probably here to stay. They will likely continue to be one of the most interesting stories in the markets for years to come.

Chris Akers

More people than ever have played video games during the pandemic, with people stuck at home finding new ways to interact with friends and family. Global revenue through the industry is expected to continue to grow. But Covid-19 has also led to delays in game production, and legislation in the huge Chinese markets on the number of hours that young people can play is a risk. Overall, it's looking like an interesting year ahead with some big game releases in the pipeline. For those companies able to adapt their business models to the next stage of the pandemic, they could deliver impressive growth for investors.

Michael Fahy

So one thing I was hoping we wouldn't have to talk about as much next year is supply chain shortages. But many of the issues that caused the shortages in the first place, such as Covid lockdowns and people working from home, are rearing their heads again. There is still going to be shortages of capacity on container ships until new ships come through in 2023. What does this mean for investors? Well, companies are holding on to more stock, which means that some of the metrics by which investors measure companies are going to be slightly out. So things like return on assets (ROA) and return on equity (ROE) will be lower.

Leonora Walter

In 2022 there may well be an even greater need to plan for your retirement. Doing this is always very important, but next year and beyond it may be even moreso, because the government has launched a view of the state pension age and moving forward the rise to age 68 from between 2044-2046 to between 2037-2039. This means that people born from the early 1970s onwards rather than people born from the late 1970s will be affected and may have to delay their retirement. They may need to save more, or plan more, to enable the level of income they want.

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Don't forget, our end of year special which featured in depth analysis on these and many other themes across investing can be found here

Filming and post production by John Rogers.