Wealth trends, opportunities, and risks in 2023 (2024)

Here we look at trends, opportunities and risks, and how real estate will perform in 2023. Our expert panel will be giving their view on the following:

• Trends and opportunities for wealthy investors
• Risks to watch out for in 2023
• How real estate will factor in 2023

What are the biggest trends and opportunities for wealthy investors in 2023?

David Bailin, CIO at Citi Global Wealth Management Investments

Americas

It's likely 2023 many investment opportunities after a mild recession. We see the next 12 months as a sequence of events, although we cannot predict the precise order of them. First, active cash management will increase portfolio wealth. Then, as we believe interest rates will be lower in 18 months, comes the demand for

intermediate bonds. As stocks bottom, different sectors, first growth then cyclicals will become attractive. Finally, we see alternatives – real estate, private equity, and venture capital – as being more attractive post-recession. 2023 will also provide a broader opportunity for non-dollar assets.

Annabelle Bryde, Head of UK Private Bank & Crown Dependencies at Barclays

EMEA

We think recessions will broadly be shallow and short-term, and aggressive interest rate hikes from central banks should ease off. For investors, it won’t be plain sailing but there’s reason enough for longer-term optimism.

Rosie Bullard, Partner at James Hambro & Partners

EMEA

If inflation is going to be structurally higher, not at the current elevated level but around 4-5%, then equities are attractive, especially for companies with pricing power, i.e. ability to raise prices to cover costs without losing demand. However, you are unlikely to find the top performers of the last decade, such as certain tech companies, being the top performers of the next.

Jonathan Fenby, Author and China analyst

Asia

I don’t believe a decoupling between China and the West will happen in a full dramatic way. However, there is, and will continue to be, a shift to China+1 strategies, where companies have production capability in the Chinese mainland and another country, or a reconfiguring of supply chains to prevent vulnerability.

Sheldon Halcrow, CEO of Caleo Capital North America

Americas

There is a lot of noise, but boiling it down to the fundamentals we have developed four I’s. Infection, which is largely moot now apart from in the Chinese mainland. Inventory, where global supply chains have been disrupted and are gradually improving but shifting geographically. Inflation, which has been surging and is now peaking and, by consequence, interest rates, which have risen aggressively but will peak in Q2 2023. Investors need to position with these in mind.

Kunal Lakhani, Director, Family Office & Major Family Groups at NAB

Australasia

2022 provided a notable shift from a tech centric high growth strategy to more traditional methodologies around value and quality of business management. I said last year that “a good PowerPoint deck doesn’t

make a good investment” and many experienced a significant drawdown, especially in venture capital and private equity investments valued at high multiples. With the sudden higher-rate environment, there is a need to review investments on a longer-term approach and lower down the risk curve.

Vincent Magnenat , Limited Partner, Global Head of Strategic Alliances & Asia Regional Head, at Lombard Odier Group

Asia

We see 2023 as the year of consequential pivots. For long-term investors, we emphasise the need for sustainability as a key factor for equity investments because consumer choice and regulation will favour companies that are making adjustments and investments to thrive in this transition to a carbon neutral, more sustainable economy.

Alexandre Tavazzi Global Strategist & Head of the CIO Office, Pictet Wealth Management

EMEA

Cash now provides 4-5% return, which hasn’t happened in years, meaning there is greater consideration on risk versus return, but high-quality debt and the traditional 60/40 portfolio is making a resurgence.

Graham Wainer CEO Investment Management, Stonehage Fleming

EMEA

We are extremely bullish on the US. Policy is at a higher level of competency and determination than anywhere else in the world – the Federal Reserve is much more resolved to get it right. The economy has benefitted from this as well as globalisation, deep capital markets, a diverse labour market and technology.

James Wey Head of Singapore and Southeast Asia, Wealth Management, JPMorgan Chase & Co

Asia

The reopening and economic recovery of the Chinese mainland is of particular interest. Economic growth will likely bottom this winter, and cyclically recover in 2023 and 2024. Meanwhile, valuation looks attractive to long term investors. We like consumption and tech names which should benefit from the service sector recovery. But we note in the near term price actions could remain quite choppy. We also see some tactical opportunities for investors who are more nimble.

What risks are you watching out for in 2023?

David Bailin, CIO at Citi Global Wealth Management Investments,

Americas

There are little fires everywhere – any one of which could be big. The biggest two risks we see are a self-reinforcing global recession that prolongs the downturn and a credit crisis caused by an absence of liquidity due to the Federal Reserve over tightening.

Rosie Bullard, Partner at James Hambro & Partners

EMEA

There are so many unknowns. When and where inflation and interest rates will peak, the pace of reopening of the Chinese mainland and the ongoing impact that has on supply chains, whether labour markets loosen, the war in Ukraine. People are taking longer to make decisions because of it.

Jonathan Fenby, Author and China analyst

Asia

China is more of a risk because there are an increasing number of politically driven decisions being taken that affect businesses and investors, which are expected to contribute to the political aims of the leadership. Some underlying societal challenges are also surfacing. Property became the main channel for savings in China, particularly for the burgeoning middle class, and the continual increase in property prices was part of the economic/ political bargain. But, the fall in property prices raises problems.

Kunal Lakhani, Director, Family Office & Major Family Groups at NAB

Australasia

Geopolitical. There are so many geopolitical risks currently impacting global investments as we have seen from trade wars to the energy crisis in Europe. Will there be pullback from global companies in certain regions?

Alexandre Tavazzi Global Strategist & Head of the CIO Office, Pictet Wealth Management

EMEA

Inflation and central banks. Inflation will be structurally higher in the next five years than the past five making the costs of doing business higher. If central banks insist on bringing inflation back to 2%, they will need to hike interest rates well above what is currently priced in markets.

Graham Wainer CEO Investment Management, Stonehage Fleming

EMEA

Long term, its ensuring that returns are matched against personal inflation. Inflation varies person to person due to spending habits, e.g. holidays, private school, homes etc. Higher levels in these discretionary areas means a need for riskier assets, but with that comes a higher degree of volatility.

James Wey Head of Singapore and Southeast Asia, Wealth Management, JPMorgan Chase & Co

Asia

The well documented ones – such as inflation continuing – we can prepare for. However, it can be challenging to predict geopolitics. We must be acutely aware of trends and developments and be nimble in cycles that are compressed and can change quickly.

How does the real estate sector factor for you in 2023?

David Bailin, CIO at Citi Global Wealth Management Investments,

Americas

Real estate and alternatives will be where wealth is grown over the coming decade.
With the rapid rise of interest rates, we have witnessed the value of these assets change, but the fundamentals for many sectors have not. We are bullish on residential, industrial and warehousing. The ‘onshoring’ trend is seeing the building of capacity as companies move production closer to home in the US and across Europe.

Annabelle Bryde, Head of UK Private Bank & Crown Dependencies at Barclays

EMEA

Property is a passion for many and will remain so, however, decisions are typically driven not only by returns, but sentiment and need. Whether looking for family use or a specialist asset that drives diversification and yield across a broader range of investments, our clients like the idea of combining passion with practicalities. This becomes more important, and a driver, as global leverage funding costs increase.

Rosie Bullard, Partner at James Hambro & Partners

EMEA

Clients are thinking about their properties and operation costs, particularly in
Europe. Property has a well-founded place in the portfolio, but there is now more scrutiny over liquidity and, for example, who the tenants of commercial properties are.

Sheldon Halcrow, CEO of Caleo Capital North America

Americas

Real estate is still favourable. Whether it’s the desire to have the ‘plan B’ residence or sophisticated investors looking for opportunities among assets that have repriced due to the pandemic and increasing rates.

Kunal Lakhani, Director, Family Office & Major Family Groups at NAB

Australasia

We see prime offices as strong. Big corporates are committing to floorspace and increasing amenities to incentivise workers to return to offices. Also, on a smaller scale, we are seeing families seek out safe havens in regional areas and island retreats to escape their cities. Prime residential is also still very strong.

Vincent Magnenat , Limited Partner, Global Head of Strategic Alliances & Asia Regional Head, at Lombard Odier Group

Asia

Interest in alternative assets is on the rise, but investors are cautious. Findings from our recent HNWI study show that APAC investors believe that private assets are a way to capture future structural changes in a regulated and risk-managed way. We are currently cautious on the property sector, but once the dovish pivot in interest rates arrives, we believe it will start recovering more substantially.

James Wey Head of Singapore and Southeast Asia, Wealth Management, JPMorgan Chase & Co

Asia

In an inflationary world, real assets provide some hedge and uncorrelated returns from financial markets. Investors are increasingly thinking about direct investment as there is more predictability and control. We are also looking at sustainable forestry as returns are attractive and not correlated with other markets and assets. Another area is investment in food technology and responsible agritech, particularly given the focus on food security.

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