A year ago, everybody was ready for a booming economic recovery in 2021, all made possible by Covid-19 vaccines. Some were even saying the end of the pandemic was in sight. Then the Delta and Omicron variants arrived. As 2021 draws to a close, the pandemic continues unabated, generating one mixed signal after another and greatly complicating the global economic recovery. There are signs that last call could be around the corner—tempered by other indications that investors still have money to make in 2022. Here are the top eight investing trends to watch out for in the new year.
1. Markets Are Still Being Driven by the Covid-19 Pandemic
investors should realise that the post-Covid market rally is already here, even if the pandemic isn’t over yet. That’s because stock markets have likely already priced in most or all of the gains that can be expected from a fully reopened economy. There might not be much more room for the economy—or the stock market—to run.
2. Federal Reserve Rate Hikes Are Likely in 2022
Stocks do well when the Federal Reserve keeps interest rates low, but the days of the Fed’s zero interest rate policy (ZIPR) are numbered. Meanwhile, the already planned reductions in the Fed’s monthly bond purchases—the so-called taper—means that quantitative easing will be over soon.
While it seems unlikely that there will be three rate hikes in 2022 at this time, and those that do occur will likely occur no earlier than the 2nd quarter, it is fair to conclude that we are entering a rising rate environment.
3. Tired of Hearing about Inflation? It’ll Get Worse Before It Gets Better
The course of inflation is going to be an even bigger story in 2022, and if the current trends aren’t reversed soon, there’s going to be market turmoil.
Higher interest rates and higher inflation are a recipe for a Wall Street retreat. It might, however, signal opportunities in the bond market or even provide some good news for savers in the form of higher APYs
4. The Job Market Is Still Unsettled
The marked improvement in the job market was a major story in 2021. The ferocious competition for workers has hurt companies with higher labor costs and staffing challenges. These issues need to be worked out before the labor market can return to normal—and until then, it will remain another drag on many public companies.
5. Electric vehicles
You cannot be in 2022 and not talk about EVs. The year 2022 is likely to see India embracing EVs in a big wayas the global pressure to cut greenhouse-gas emissions intensifies. More importantly, 2022 could see theecosystem for EVs getting a big boost. Year 2022 promises to be interesting and also significant in terms of technology shifts. Hopefully, the endconsumer should be the big beneficiary.
6. Remote workplaces and remote work
Most companies in India managed to overcome COVID constraints by adopting work-from-home protocols.Year 2022 could see remote work and remote workplaces become a norm and also become a flexible part ofregular employee engagement. That, in a way, is what the metaverse is all about. One outcome will be that lesspeople will travel for work and more will travel for leisure. That could still be some time away.
7. Technological Innovation Remains Critical for an Evolving Society
As the world continues to move through the COVID-19 pandemic, society will likely continue to communicate, work, shop, and educate more remotely than ever before. Technology will continue to assist with this societal transformation. Specifically, revolutionary technologies, such as artificial intelligence, robotics, blockchain, cybersecurity, and even 5G, will be of paramount importance to individuals, corporations, and governments. Companies across multiple market capitalizations that are proven innovators and deliver or utilize these types of revolutionary technologies most effectively will best be able to adapt to our ever-evolving society.
8. E-commerce Growth Story Continues
The transition from traditional, in-person retail sales to online sales was well underway before the COVID-19 pandemic due, in large part, to the speed and convenience of shopping online. This transition has only accelerated through the pandemic. Consider that E-commerce sales accounted for just 4.2% of total U.S. retail sales in Q1 2010 and recently accounted for over 13% in Q3 2021, according to Statista. It is also estimated that a record $207 billion will be spent online in the U.S. during the 2021 holiday shopping season. Additionally, it is forecasted that E-commerce will account for nearly 22% of all retail sales globally by the end of 2024. As a result, it has become abundantly clear that E-commerce is not just a fad or a seasonal story but rather represents an ongoing growth narrative with many associated investment opportunities. In our view, these opportunities exist for traditional E-tailers and other companies that derive revenues from their role in the overall E-commerce ecosystem, such as payment providers, Industrial REITs, and air freight & logistics firms.