Market strategists, portfolio managers, research analysts, and economists have forecast that the United States is positioned to be the best destination for investors to allocate their funds for the latter half of 2023, according to a recent survey conducted by Natixis Investment Managers, an American French-based global asset management company currently with a market cap of $14.94 Billion.
The US has already defied expectations of earlier predictions of a possible recession by experiencing a resurgence in the tech sector driven by the increasing interest in artificial intelligence (AI). This tech boom has driven a market rally, with impressive returns of 30% for the Nasdaq and 15.9% for the S&P 500 during the first half of the year.
The survey report reveals that approximately one-third of the surveyed experts believe this positive trend will continue for the next six months, positioning the US as the strongest equity market globally. Yet, the experts don’t anticipate an intensification of the tech rally, with less than a third expecting steady growth, and a minority of 6% foreseeing a potential “bubble burst.”
What’s worth noting here is that half of the surveyed experts expect equities to cool off in the latter part of the year, leading to price adjustments that align with underlying fundamentals. While 34% of the experts are betting on the US, 22% see Japan or emerging markets (excluding China) as potential leading performers.
On the other hand, concerns linger for China, with only 6% of experts predicting it to be a winner in the second half of the year.
“There are concerns that the Chinese housing market will remain sluggish and that has weighed on sentiment towards all things related to real estate and construction, including miners over fears that commodities demand could weaken,” report quoted Danni Hewson, head of financial analysis at AJ Bell, as saying.
China’s reopening has not been as robust as hoped, causing investor fatigue while waiting for new incentives from the government.
Looking at fixed income markets, most experts believe long-duration bonds will outperform short-duration bonds by the end of 2023, as central banks continue to raise rates to the highest levels since the global financial crisis.
Despite the optimism, Natixis IM forewarns against overconfidence as challenges persist.
The survey specifically sees geopolitical tensions, central bank policies, and corporate earnings as potential obstacles for the market. Inflation remains a concern, and while it is cooling off, strategists believe it may persist until 2025 before targets are met.
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