Crystal ball gazing into 2023

By Greg Smith, Head of Retail at Devon Funds

In New Zealand many people are still only just putting 2022 to the back of their minds and getting back from their (somewhat ‘wet’ in many cases) summer holidays. With this in mind, it is still probably early enough to roll out the tradition of crystal ball gazing, making big picture predictions on developments and factors that will influence markets and portfolios in the rest of the year ahead.

Looking back on our top 10 predictions from just over a year ago, there were certainly more hits than misses. The “Great Rotation” from growth to value did indeed click up a few gears, while a harsh dose of reality did set in for investors in crypto-currencies.The kiwi housing market did indeed weaken more than most expected while workers both at home and abroad became more pay-packet conscious. The groundswell for a third supermarket operator in NZ was not as loud as it could have been, but the prediction that tensions would ratchet higher on the geopolitical front proved to be somewhat of an understatement, given Russia’s invasion in the Ukraine.

Markets generally were not resilient, although the kiwi market did hold up better than many counterparts. Our predictions that the world’s central banks would call the tune throughout the year was on point, and while inflationary fears did not disappear, there were signs that inflation had peaked in the latter stages of the year.