WEALTH OUTLOOK 2023 Roadmap to recovery：Portfolios to anticipate opportunities -Citi此為英文文檔

CitiGlobalWealthInvestmentsPortfoliostoanticipateopportunitiesIfyouarevisuallyimpairedandwouldliketospeaktoaCitirepresentativeregardingthedetailsofgraphicsincludedinthisdocument,pleasecall+1(800)788-6775.INVESTMENTPRODUCTS:NOTFDICINSURED·NOTCDICINSURED·NOTGOVERNMENTINSURED·NOBANKGUARANTEE·MAYLOSEVALUECitiGlobalWealthInvestments1.1FromthedeskoftheCIO:OurWealthOutlook202361.2Roadmaptorecovery:Marketslead,theeconomyfollows101.3Expecttheunexpected:Howwemightbewrong181.4OutlookWatchlist2023231.5Betterlong-termreturnsahead25NAHIGHERRATEENVIRONMENT2.1Itistimetoputexcesscashtowork302.2Pursuingportfolioincomewithshort-termbonds332.3Whydividendgrower“tortoises”maybecoreholdings392.4Whycapitalmarketsaremoreimportantthanever422.5Alternativeinvestmentsmayenhancecashyields453.1Thetransformativepowerofunstoppabletrends513.2AgreaterseparationbetweenEastandWest:G2polarizationintensifies553.3Energysecurityisvital593.4Deepeningdigitization643.5Digitizationandthegrowthinalternativeinvestments683.6Howunstoppabletrendsareredefiningrealestate723.7Seekingtoboostportfolioimmunitywithhealthcare774.1Asia:Broaderre-openingtoenableregionalrecovery824.2Europe:Bracingforwinterrecession884.3LatinAmerica:Selectiveopportunitiesamidcheapvaluations934.4NorthAmerica:Thehuntforqualityandyield98GLOSSARYJIMO’DONNELLlobalWealthWelcometoOutlook2023,ourannualpublicationthatsetsoutourexpectationsandkeyinvestmentthemesforthecomingyearandbeyond.Thisedition,“Roadmaptorecovery:Portfoliostoanticipateopportunities,”highlightsstepsthatwebelieveyoushouldconsidertohelpseekreturns.Investingoverthepastyearhascomewithitschallengesanduncertaintiesduetoinflation,monetarytightening,slowinggrowth,internationalconflictandanintensifiedUS-Chinatechrivalry.Forthefirsttimeindecades,equitiesandfixedincomesufferedsignificantfallssimultaneously,alongsidealternativeassetclasses.While2023willstillhaveitsshareofchallenges,wealsoseeitasayearofchangeandopportunity.Inthexpectamildrecessionwithregionssuchastheeurozonebeingmoreheavilyimpacted.AsinflationetheUSFederalReservepivotingfrominterestratehikestocutsandmarketsshiftingfocusto2024recovery,unlockingmorepotentialopportunitiesforinvestors.Asthemarketscontinuetoswing,timelyguidancehasbecomeevenmorevaluable.Ourinsightshelpusengageindeeperclientconversationsandcreatestrategiesthatachieveyourinvestmentobjectives.Thevalueofkeepingportfoliosfullyinvestedremainsincreasinglyimportant–markettimingcancomeatagreatcost,asturningpointsoftenarrivewithlittlewarning.Foryourconvenience,wehavealsocreatedhelpfulsummaries,includingFindings&Opportunitiesandanewversionofthispublicationinjusttwosides.Welookforwardtocontinuedpartnershipandsuccessinthenewyear.CitiGlobalWealth|4InvestmentsCitiGlobalWealthInvestments1.1FromthedeskoftheCIO:OurWealthOutlook20231.2Roadmaptorecovery:Marketslead,theeconomyfollows1.3Expecttheunexpected:Howwemightbewrong1.4Isyourportfolioreadyforayearofchangeandopportunity?1.5Betterlong-termreturnsaheadEDESKOFTHECIODAVIDBAILINChiefInvestmentOfficerandGlobalHeadofInvestmentsCitiGlobalWealthOutlook2023Forinvestors,2022willnotbemissed.Theyearpresentedaseriesoffirstsandworsts.ThetragicwarinUkrainehugelydistortedglobalfoodandenergysupplychains,furtheremphasizedthedividebetweentheUSandChina–seeAgreaterseparationbetweenEastandWest:G2polarizationintensifies–andacceleratedtheonshoringofcriticalbusinessinfrastructure.TheFedinstigateditsfastestsetofinterestrateincreasesever.Indoingso,itrespondedtotheinflationitcausedbyaddingexcessiveliquiditytocounteracttheeffectsofthepandemic.Asthesafe-havenUSdollarstrengthened,goodsalmosteverywhereelsebecamemoreexpensive,addingtoglobalcentralbanktighteningpressures.Theseareallsourcesofinstability.Inthisenvironment,equitiesandbondsdeclinedintandembythemosteverin2022,withjointlossesofabout20%atthelowpoint.Cashoutperformedalmosteveryassetclass.Aswelookahead,however,weneedtorememberthatmarketsleadeconomies.Thepoormarketreturnsof2022anticipatetheeconomicweaknessweexpectin2023–seeRoadmaptorecovery:Marketslead,theeconomyfollows.CitiGlobalWealthoverview||6InvestmentsCitiCitiGlobalWealthInvestmentsoverviewoverview||7WebelievethattheFed’sratehikesandshrinkingbondportfoliohavebeenstringentenoughtocauseaneconomiccontractionwithin2023.AndiftheFeddoesnotpauseratehikesuntilitseesthecontraction,adeeperrecessionmayensue.ThemostrecentinflationdataandFedminutessuggestthattheFedisawareoftheserisks.YetFedpolicymakers’tendencytowardexcessgivesuspauseasweplanfor2023.Withperfecthindsight,sittingout2022wouldhavebeenworthwhile.Buttothinkthatwayisdangerousforwealthpreservationandcreation.Oneyearisjusta“moment”inthelifetimeofaportfolio.Sidesteppingthepandemicandwar-ladenpastthreeyearswouldhavebeenamajormistakeforequityinvestors.BetweenDecember2019andNovember2022,theS&P500Indexrose25%andtheMSCIWorld15.4%.For2023,wereiteratethefundamentalwisdomofkeepingfullyinvestedportfolios–seeforexample,Itistimetoputexcesscashtowork.Remember,theworldeconomyishighlyadaptiveandresilient.Sotooaremarkets.Thinkingabout2023Marketsin2023willleadtheeconomicrecoveryweforeseefor2024.Therefore,weexpectthat2023mayultimatelyprovideaseriesofmeaningfulopportunitiesforinvestorswhoareguidedbyrelevantmarketprecedents.First,though,weneedtogetthrougharecessionintheUSthathasnotstartedyet.WebelievethattheFed’scurrentandexpectedtighteningwillreducenominalspendinggrowthbymorethanhalf,raiseUSunemploymentabove5%andcausea10%declineincorporateearnings.TheFedwilllikelyreducethedemandforlaborsufficientlytoslowservicesinflationjustashighinventoriesarealreadycurtailinggoodsinflation.Therelativehealthofcorporateandpersonalbalancesheetshasdelayedaneconomicdownturn,fornow.Householdborrowingissustaininggrowthpresently,butthisdissavingislikelyunsustainable,especiallygivenfinancialmarketandrealestatepricedeflation.Also,whenshort-termratesarehigher,thereisanaturalbiastodeferringpurchases.Weremindinvestorsthatoverthepast100years,nobearmarketassociatedwitharecessionhasbottomedbeforetherecessionhasevenbegun.(Ofcourse,thereisafirsttimeforeverything.)Webelievethatthecurrentbearmarketrallyisbasedonprematurehopesthattherecessionwillnotoccur–aso-called“softlanding”–andthattherewillnotbeameaningfuldeclineincorporateearnings.Second,weneedtogetthroughadeeperrecessioninEuropeasitstrugglesthroughawinterofenergyscarcityandinflation.WealsoneedtoseeasustainedeconomicrecoveryinChina,whosepriorregulatorypoliciesandcurrentCOVIDpoliciescurtaildomesticgrowth.Third,weneedtoseetheFedtrulypivot.Ironically,whentheFeddoesfinallyreduceratesforthefirsttimein2023–aneventthatweexpectafterseveralnegativeemploymentreports–itwilldosoatatimewhentheeconomyisalreadyweakening.WethinkthiswillmarkaturningpointthatwillportendthebeginningofasustainedeconomicrecoveryintheUSandbeyondoverthecomingyear.CitiCitiGlobalWealthInvestmentsoverviewoverview||8HigherreturnsmaybeonthehorizonAfterthebigdropinvaluationsin2022,our10-yearreturnforecasts–or“strategicreturnestimates”(SREs)–haverisen.Ayearago,ourstrategicassetallocationmethodologypointedtoannualizedreturnsforGlobalEquitiesoverthecomingdecadeofTodaythatstandsatSREsforPrivateEquityandRealEstatearehigherstill.Likewise,theGlobalFixed3.4%,upfrom1.5%–seeBetterlong-termreturnsahead.1A“sequenceofopportunities”Whilenoonecanknowtheprecisetimingandsequenceforselectinginvestmentsgloballyatatimeofsignificantuncertainty,wethinkthattherearenumerousdatapointstosuggestthatapotentialsetofopportunitieswillarisein2023.Aheadoftheexpectedrecession,wearecommittedtoselectivityandquality.Thisbeginswithfixedincome,whichwebelieveoffersgenuineportfoliovaluenowforthefirsttimeinseveralyears.Short-durationUSTreasuriespresentacompellingalternativetoholdingcash.ForUSinvestors,municipalbondsalsoseekbetterrisk-adjustedafter-taxreturns.Broaderinvestment-gradebondsofferarangeofhigheryieldsateverymaturity.Andloansinprivatemarkets–thinkprivateequitylending–offerlargeryieldpremiumswithlowerloan-to-valueratiosthanatanytimesince2008-09.Iftheeconomydoesgointoamildrecession,theUSyieldcurvewillinitiallyinvertmoredeeply.Wecanimaginethusthatlongerdurationbondsmayperformwellatthestage.Afterthisstage,wewouldlooktoredeployassetsmorewidely.BroadeningequityexposuresInthenearterm,webelieveequitiesincompanieswithstrongbalancesheetsandhealthycashflowswillprovideinvestorswithgreaterportfolioresilience–seeWhydividendgrower“tortoises”maybecoreholdings.Weexpectthatas2023progresses,opportunitiestoincreaseportfolioriskwillevolve.Onceinterestratespeak,wewilllikelyshifttowardnon-cyclicalgrowthequities.Thesehavealreadyrepricedlower,andweexpectthemtobeginperformingoncemorebeforecyclicals.Amongnon-cyclicalgrowthequitiesaremanyexposedtoourUnstoppableTrends–seeDeepeningdigitization.Subsequently,earlyintherecoveryperiod,wewillalsoseekareentryopportunityincyclicalgrowthindustries,asvalueequitiesmayprosperwhensupplypipelinesareunabletomeetreviveddemand.Thedollarcouldcontinuerallyingforlongerthanfundamentalsjustify.Overshootshavebeenacharacteristicofpriorperiodsofdollarstrength.Aroundadurabledollarpeak,wewilllooktoaddmorenon-USequitiesandbonds.urceCitiPrivateBankGlobalAssetAllocationteametEquityGlobalFixedIncomeconsistsofInvestmentGradeHighYieldandEmergingMarketFixedIncome.StrategicReturnEstimatesareinUSdollars;allestimatesareexpressionsofopinion,aresubjecttochangewithoutnoticeandarenotintendedtobeaguaranteeoffutureevents.StrategicReturnEstimatesarenoguaranteeoffutureperformance.CitiPrivateBankGlobalAssetAllocationTeam.SREsforMid-Year2022arebasedondataasof30Apr2022.ReturnsestimatedinUSdollars.StrategicReturnEstimates(SRE)basedonindicesareCitiPrivateBank’sforecastofreturnsforspecificassetclasses(towhichtheindexbelongs)overa10-yeartimehorizon.Indexesareusedtoproxyforeachassetclass.Theforecastforeachspecificassetclassismadeusingaproprietarymethodologythatisappropriateforthatassetclass.Equityassetclassesutilizeaproprietaryforecastingmethodologybasedontheassumptionthatequityvaluationsreverttotheirlong-termtrendovertime.Themethodologyisbuiltaroundspecificvaluationmeasuresthatrequireseveralstagesofcalculation.AssumptionsontheprojectedgrowthofearningsanddividendsareadditionallyappliedtocalculatetheSREoftheequityassetclass.FixedIncomeassetclassforecastsuseaproprietaryforecastingmethodologythatisbasedoncurrentyieldlevels.Otherassetclassesutilizeotherspecificforecastingmethodologies.EachSREdoesnotreflectthedeductionofclientadvisoryfeesand/ortransactionexpenses.Pastperformanceisnotindicativeoffutureresults.Futureratesofreturncannotbepredictedwithcertainty.Theactualrateofreturnoninvestmentscanvarywidely.Thisincludesthepotentiallossofprincipalonyourinvestment.Itisnotpossibletoinvestdirectlyinanindex.SREinformationshownaboveishypothetical,nottheactualperformanceofanyclientaccount.Hypotheticalinformationreflectstheapplicationofamodelmethodologyandselectionofsecuritiesinhindsight.Nohypotheticalrecordcancompletelyaccountfortheimpactoffinancialriskinactualtrading.SeeGlossaryfordefinitions.CitiGlobalCitiGlobalWealthInvestmentsoverviewoverview||9AlternativeinvestmentsInourview,2023willpotentiallybeagreatvintageforalternativeinvestments.Higherinterestrateshavecausedarepricingofprivateassetsamidmuchhigherborrowingcosts.Assuch,specialistmanagerswillbeabletodeploycapitalintoareasofdistressandilliquidity–seeAlternativeinvestmentsmayenhancecashyields.Acrosstheventurecapitalindustry,capitalisnowbeingdeployedmorejudiciouslyandatmorefavorablevaluationsforinvestors–seeDigitizationandthegrowthinalternativeinvestments.Forrealestate,ahigherbarisnowinplacefornewinvestmentacrossalmostallmarketsandpropertytypes.Weseethisasafavorablebackdropforrealestateinvestorsin2023–seeHowunstoppabletrendsareredefiningrealestate.Ourstrategicreturnestimatesintheseareasarenowmateriallyhigherthantheywerejustayearagowheninterestratesweremuchlower,indicativeofhowmuchvaluemaybeearnedovertimebytakingilliquidityriskwhenothersarelesswillingtodoso.TowardanewnormalwithnewrisksOverthepastsixmonths,wehavewrittenaboutthe“l(fā)ittlefires”burningacrosstheglobe.2NooneknowshoworwhenthewarinUkrainewillend.WecannotbesureofChina’strajectorygivenitselectionoflike-mindedleadership.Andwecertainlydonotknowwhatpoliticaleventswillunfoldinresponsetotherecessionitself,asgovernmentswilllacktheresourcesneededtosupportindividualsandcompaniesastheydidthroughthepandemic.Inshort,marketstodayareassumingthatnoneoftheselittlefiresgrowbiggerorcometogetherinanuntimelyway–seeExpecttheunexpected:Howwemightbewrong.Thatitselfmeansthatinvestorsneedtothinkof“sequencing”asausefulinvestingdiscipline.Aswelookaheadto2023,itisatimeforpragmatismandpracticality.Therehasbeennoeconomicperiodlikethisone,buffetedbythecollectiveimpactofapandemic,awarandahighlyreactiveFed.Thatsaid,wemaintainourrealisticviewthattheworldwillseebusinessesimprovethelivesofcustomersacrosstheworld.Forexample,webelievethattheclimatechallengeswillultimatelybeaddressedandprovidefuelforprofitsalongtheway–seeEnergysecurityisvital.Webelievethatthepost-pandemicperiodwillacceleratethedevelopmentofnewtreatmentsfordiseaseandnewtoolstopreventfuturecalamities–seeSeekingtoboostportfolioimmunitywithhealthcare.Webelievethatnewglobalmacrorealitieswillpresentopportunitiestoreshapesupplychainsandalliances.Andwealsobelievethatareturntoa“newnormal”isthelikeliestoutcomefortheglobaleconomy–thoughnottheonlyone.IthasbeenagreathonortoworkwithahighlycapableteaminourOfficeoftheCIOtheselastyearsasweprovideyou,ourvaluedclients,withinsightsdesignedtomakeyourlivesbetteraswemakeyourportfoliosmoreresilient.Wishingusallabetter,healthierandpeaceful2023.DAVIDBAILINChiefInvestmentOfficerandGlobalHeadofInvestmentsCitiGlobalWealthStrategyBulletinCitiGlobalWealthInvestmentsOctwilldWeenterthepotentialopportunitiesunfolds.STEVENWIETINGChiefInvestmentStrategistandChiefEconomistldeconomynolaterthanmidcapitalmarketsandalternativestrategiesforsuitableinvestorsreaterinvestmentequitiesinnoncyclicalindustriesyieldsdroppingcurrenciesfindinga“deepvaluebottom”in2023transformingtheworldeconomyCitiGlobalWealthoverview||10InvestmentsCitiCitiGlobalWealthInvestmentsoverviewoverview||11givenwaytoabad“hangover”asweheadinto2023.Aswithanyday-afterpain,today’sheadachewillnotlast.Butmanyinvestorsfinditdifficulteventoimaginerecovery.Webelievechangeforthebetterwillcomein2023,evenasmarketsfacechallengesalongtheway.GrowthandinflationwereneverdestinedtostayintheirpreviousnarrowrangesgiventheEMuchoftoday’seconomicdistortionderivesfromunusualdisruptionstosupplyandvast,unpredictableswingsindemand.Aggregatedemandstimuluswasnottherightmedicinefortheseproblems.Stimulatingdemandwithoutstimulatingsupplygeneratespainfullyhighinflation.Onewaytoavoidcompoundingahangoveristostopdrinking.Tighteningfiscalandmonetarypolicyistheeconomicequivalentofthat.USfallenyeartodatespendinghasfallenabout1%in2022todatewiththebulkofFedmonetarytightening’simpactyettocome.Theslowdowninconsumerspendingandthesharpriseingoodsinventorieswillputthebrakesonglobaltradegrowthandcorporateprofitsin2023–FIGURE3.FiGUre1.HowTHeCoviDSHoCKHASDiSTorTeDGrowTHANDiNFLATioNY/Y/Y%Change25%2050-5oomCPI-URealUSGDPoom"GreatUkraineKoreanUkraineKoreanembargoffWarArrowsshowhistoricallywiderange'40'47'54'61'68'75'82'89'96'03'10'17'24FiGUre2.FiSCALANDMoNeTArYreSTrAiNTreTUrNY/Y/Y%Change150%150%7550250-25-50 ReservebankcreditoutstandingFederaloutlays'72'77'82'87'92'97'02'07'12'17'22%changeyear-on-year25%20%changeyear-on-year25%2050-5-20CitiGlobalWealthInvestmentsoverviewoverview||12FiGUre3.SoAriNGiNveNTorieS,weAKeNiNGTrADeAHeADRecessionRealmanufacturing&tradeNominalretail'70'75'80'85'90'95'00'05'10'15'20FiGUre4.reALGDPANDCiTiGLoBALweALTHiNveSTMeNTS’ForeCASTSCitiCitiGlobalwealthinvestmentsrealGDPForecasts(UpdatedasofAugust2022)20212022202320202024a4.54.0-0.72.0--0.51.0--1.01.0Global-.72.3obalrecessioningrowthweexpectislikelytobeweakestinfortyyearsoutsideoftheGlobalFinancialCrisisyearof2009andtheCOVIDshutdownyearof2020.Amongthemajoreconomies,theeurozoneandtheUKarelikelytocomeoutworst,withfull-yearcontractionsof0.5%and1%respectivelyastheycontendwithsky-highenergycosts,aswellaspolicytightening.ookstobeoneyearaheadoftheUSandmayprovidesomediversificationtoportfoliosintheyearstocome.Amidweaklabormarketsandarealestatecrisis,theworld’ssecond-largesteconomyisalreadyinmonetaryeasingmode.Aftertwodismalyears,weexpectlowChineseprofitstorisealongwithexpandingmoneysupply,justasUSprofitsandmoneysupplycontract.However,itsnear-termprospectsrelyontheongoingrelaxationofitsstrictCOVIDmeasuresandcontinuedsupportforitsnascentrealestaterecovery–seeAsia:Broaderre-openingtoenableregionalrecovery.WiththeUSlikelyenteringamildrecessionandunemploymentprobablyexceeding5%,weseethegreatestsurgeininflationaslargelybehindusin2022.Thatsaid,USinflationisunlikelytoreachpreCOVIDnormsinWeseeitretreatingto3.5%byend-2023and2.5%byend-2024,whileaveraginghigherduringthosecalendaryears.OurestimatesareunchangeddespiteourreducedeconomicgrowthforecastssinceJune2022andslowrecoveryexpectationfor2024.CitiCitiGlobalWealthInvestmentsoverviewoverview||13ecessionsquicklyonceunderwayHoweveritdoeshaveahistoryoffrequentpolicyreversals.Inthepast45years,peakpolicyrateshavebeensustainedforonlysevenmonthsonaveragebeforecuttingrates.IftheFedcansoonfindabalancebetweentheexcessiveeasingofandtherapidtighteningithas“rhetorically”encouragedin2022,itmightavoidamplifyingfinancialandessesPositioningforayearofAcross2022,investorsbracedfortheforecast2023recession.Theresultingbearmarketiswellunderway,althoughincomplete.Anewbullmarkethasneverbegunbeforearecessionhasevenstarted.Mosttypically,abullmarketbeginsataroundthemid-waystageofarecession.TheverystrongcommunicationsoftheFed’sintentionsandayearofbearishanticipationmayseemarketsbottomsomewhatsoonerthanusual.However,asoflateNovember2022,arecessionarydeclineinemploymentandcorporateprofitshasnotevenbegun.Within2023,weexpectinvestorstostartdiscounting2024’srecovery.Onlytwiceinthepastcentury–includingtheGreatDepression–didUSequitiestakemorethantwocalendaryearstofindalastingbottom.Butfurtherlossesmightstillcomefirst.Whatmightmarkthebottomformarketsamidthecomingrecession?Asusual,producerswilloverreacttodemandweakness,cuttingoutputtoofar.Withinseveralmonthsofthatmoment,the“excessivecaution”willbefollowedbyreportsoffallinginventories.Suchdatapointswillbeamongthepreconditionsforrecovery.Earningspersharewilllikelyonlyfollowequitieshigher,withthepastlaghavingbeenaboutsixmonths–FIGURE5.FiGUre5.eArNiNGSPerSHAreBoTToMLATerTHANMArKeTSYear-over-year90%705030-30-50-70EPSestimateMSCIWorldAC(6-monthlead)'97'99'01'03'05'07'09'11'13'15'17'19'21'23CitiCitiGlobalWealthInvestmentsoverviewoverview||14FiGUre6.DoLLArreACHiNGHiSToriCeXTreMeSDollarIndex(Jan2006=100)908075808590950005101520heUSdollarmayovershootInthecomingenvironment,welookforanendtotheUSdollar’smightyascent.Thisperiodofstrengthhasbeenitsthirdsuchsecularbullmarketsinceitbeganfloatingfreelyin1971–FIGURE6.However,thereisariskthatitwillovershoot,risingforlongerthanisjustifiedbyfundamentaldrivers.Thereareprecedentsforsuchanovershoot.