The biggest market, the US, has had the same query year in 2022. This is the only year when the S&P500 and US Treasuries have negative returns –possibly the worst year for a conventionally balanced 60:40 portfolio since 1974. Central banks’ almost unanimous and synchronised tightening actions have put asset prices in a seemingly downward spiral. All monetary regulators are caught up in the rat race of showcasing high real rates to underscore the attractiveness of their economy.

Global equities re-rating could gain traction towards the later part of 2023. The market’s “look ahead” character means lacklustre economic conditions in 2023 are unlikely to stand in the way of an asset price recovery in the latter half of the year. On the fixed-income side, global central banks are unlikely to cut policy rates quickly; the yield curve may remain inverted over most of the year, reflecting growth concerns. Weaker economic conditions are likely to cause credit spreads to widen throughout most of 2023 but reverse late in the year as economic growth bottoms. Among markets, we like developed over emerging markets and prefer US and Japanese equities over Europe.

Growth outlook for India is likely to be resilient over the rest of the world, given the inward nature of the market led by domestic demand and an uptick in the investment cycle. The further GDP growth here would largely hinge on an increase in total factor productivity. This, in turn, would stem from adopting differentiated digital efforts to transform India’s economy. India-Stack, an end-to-end technology eco-system that endeavours to build and should change the way document processing, access to credit improves online penetration (ONDC) and payments and transfers (UPI, RuPay, Fastag, GSTN etc.).