Global equity returns expected to see a slide this year

Ken Peng, head of Investment Strategy, Citi Global Wealth for the Asia Pacific, added that the central bank in many developed countries is implementing quantitative easing, including the US Federal Reserve.

Central banks also plan to allow inflation rates to rise to mid-level in the long term. The US economy is expected to grow at 3.5 per cent as service industries experience positive recovery and manufacturing industries still experience tailwind impact.

Meanwhile, China's economy is expected to grow by 4.5 per cent with a prediction that interest rates will be lowered because of the slowdown of the property industry and policies enacted in various industries that have impacted exports to China and commodity goods, analysts told the seminar.

For 10-year US treasuries, an increase in yield is expected, rising to 2.1 per cent by the end of 2022.

Additionally, Citi analysts predict global equity returns in 2022 to be at 8 per cent and global fixed income yields at minus 1 to zero per cent.

However, there are risk factors that can pressure the market, such as geopolitics turmoil around the world, including the US-China or the US-Russia relations, the seminar heard.

Therefore, investors should keep an eye on the global environment to diversify risk and optimise their portfolios in the long term.

Although the investment world still faces many challenges, Citi analysts are optimistic about cyclical industries that have benefited from the changing environment.

They also see the opportunity to drive sustainable returns and leverage the capital market, to increase returns from holding cash or fixed-income investments.

They recommend diversifying in various industries which can be categorised into three themes, which are:

• Long-term leaders – Switch from rebound investing to sustain returns. Although there were industries with high yields in 2021, they found that industries that can deliver highest and most consistent returns are IT technology, healthcare and consumer staples.
• Beat the cash thief – Beat holding cash with investments in fixed income that deliver positive returns as Covid-19 has impacted many companies that need to manage their debt. It is expected that the fixed income segment to provide the best returns are the emerging market bonds in Asia, high yield bonds and US treasuries.
• Unstoppable trends – Long-term economic trends that are expected to grow and change the world over many years, including investments in clean energy where public sectors are putting greater focus on ‘greening the world’, technology and digitisation in companies in the US or China, the development of Asia along with the healthcare segment where it has been proven from increasing longevity, Ken concluded.

Don Charnsupharindr, retail banking head at Citi Thailand, commented: “In 2022, Citibank is prepared to offer new funds to our clients, which will lead to growth in investment. Our AUM [assets under management] in the previous year has grown to our satisfaction, and there was growth across Citigold and Citi Priority segment, which is well-equipped to offer investment opportunities around the globe, providing over 200 funds in collaboration with five domestic asset managers and 12 global asset managers that carry products in diverse asset classes and markets.”

Don added, “At Citigold, relationship managers are proactive and attentive, providing recommendations and servicing for all transactions via telephone or the Citi Mobile application where Citigold customers can buy and sell funds themselves and track movements in their portfolio. Customers can also transfer funds via Promptpay to various banks or transfer to international accounts with ease, as the service is available 24 hours.”