We’ve been diving into how some of India’s largest AMCs are looking at the year ahead.
Time now for “Economy and Markets”, @SBIMF’s outlook for 2023.
A 🧵
1/n
Time now for “Economy and Markets”, @SBIMF’s outlook for 2023.
A 🧵
1/n
2022: Review
Global equity and bonds - both out of favour 😦
👉 End of cheap money -> rise in bond yields -> pressure on equity valuations
👉 💲strengthened
👉 Energy prices surged ⏫
👉 Gold was flat
👉 Indian 🇮🇳equity out-performed its peers 👍🏼
2/n
Global equity and bonds - both out of favour 😦
👉 End of cheap money -> rise in bond yields -> pressure on equity valuations
👉 💲strengthened
👉 Energy prices surged ⏫
👉 Gold was flat
👉 Indian 🇮🇳equity out-performed its peers 👍🏼
2/n
2022: Quick review / Inflation
Monetary policy tightened 🪛 globally.
3/n
Monetary policy tightened 🪛 globally.
3/n
2022: Quick review / Japan
Even Japan had to react to inflation.
BoJ tweaked the YCC to a higher cap…
… and 10yr bond yield surged from 0.25% to 0.40%
💹Yen appreciated against 💲🔻
4/n
Even Japan had to react to inflation.
BoJ tweaked the YCC to a higher cap…
… and 10yr bond yield surged from 0.25% to 0.40%
💹Yen appreciated against 💲🔻
4/n
2023 Outlook: Inflation
Inflation may have ⛰️ peaked, but will stay above the desired level in 2023.
5/n
Inflation may have ⛰️ peaked, but will stay above the desired level in 2023.
5/n
2023 Outlook: China
China’s growth could recover from COVID by 2H 2023
6/n
China’s growth could recover from COVID by 2H 2023
6/n
2022: Quick review / Global Bond Markets
Yields increased with monetary tightening
7/n
Yields increased with monetary tightening
7/n
2022: Quick review / India Rates
Short-end yields sharply increased 📈in 2022 compared to a year ago
8/n
Short-end yields sharply increased 📈in 2022 compared to a year ago
8/n
2022: Quick review / India Rates
Domestic Yield Curve flattens
9/n
Domestic Yield Curve flattens
9/n
2023 Outlook: Recession?
👉 US 🇺🇸: A strong case of recession by the end of the year, or weak growth at the very least.
👉 Europe: Increasing consensus around a recession.
👉 China 🇨🇳: Bumpy recovery from a very depressed base.
10/n
👉 US 🇺🇸: A strong case of recession by the end of the year, or weak growth at the very least.
👉 Europe: Increasing consensus around a recession.
👉 China 🇨🇳: Bumpy recovery from a very depressed base.
10/n
2023 Outlook: INDIA / Growth
Growth challenges from global headwinds 🌪️
11/n
Growth challenges from global headwinds 🌪️
11/n
2023 Outlook: INDIA / Capex
Modest corporate capex recovery since mid-FY22….
12/n
Modest corporate capex recovery since mid-FY22….
12/n
2023 Outlook: INDIA / Capex
… but global headwinds to corporate profit could dent near-term capex momentum 😟
13/n
… but global headwinds to corporate profit could dent near-term capex momentum 😟
13/n
2023 Outlook: INDIA / Corp. Balance sheet
🙂 Balance sheet strength will aid growth once global headwinds subside.
14/n
🙂 Balance sheet strength will aid growth once global headwinds subside.
14/n
2023 Outlook: INDIA / Real Estate
🏠 Residential real estate sector prospects improving
15/n
🏠 Residential real estate sector prospects improving
15/n
2023 Outlook: INDIA / Consumption
Aided by lower inflation & better low-end jobs 🧑🏭, consumption to recover
16/n
Aided by lower inflation & better low-end jobs 🧑🏭, consumption to recover
16/n
2023 Outlook: INDIA / Inflation
@SBIMF expects CPI Inflation to moderate to ~5% in FY24 on lower fuel ⛽️ & core
18/n
@SBIMF expects CPI Inflation to moderate to ~5% in FY24 on lower fuel ⛽️ & core
18/n
2023 Outlook: INDIA / Bank Credit
👉 Growth could moderate; but to stay in double digits.
19/n
👉 Growth could moderate; but to stay in double digits.
19/n
2023 Outlook: INDIA / Cost of Funds
Cost of funds likely to rise in the near-term despite policy pause.
20/n
Cost of funds likely to rise in the near-term despite policy pause.
20/n
2023 Outlook: INDIA / BoP
Widening trade deficit will burden BoP deficit in FY23; INR to come under further pressure.
21/n
Widening trade deficit will burden BoP deficit in FY23; INR to come under further pressure.
21/n
2023 Outlook: INDIA / Earnings
While near-term challenges persists; medium-term earnings will be robust.
22/n
While near-term challenges persists; medium-term earnings will be robust.
22/n
2023 Outlook: INDIA / Equities
👉 Volatility to continue, at least in H1
👉 Mass consumption, benefitting from cooling inflation, may be better off
23/n
👉 Volatility to continue, at least in H1
👉 Mass consumption, benefitting from cooling inflation, may be better off
23/n
2023 Outlook: INDIA / Equities
Asset allocation: Diversification beyond equities into bonds and gold may help.
24/n
Asset allocation: Diversification beyond equities into bonds and gold may help.
24/n
2023 Outlook: INDIA / Debt
₹ liquidity suction in near term.
👉🏼 BoP to stay in deficit in 2H FY23; to drive more foreign exchange sell
👉🏼 Currency outflow likely ~₹ 1.5 trillion in 2H
👉🏼 FX reserves likely to🔻over the next few months
👉🏼 Short-term rates could rise
25/n
₹ liquidity suction in near term.
👉🏼 BoP to stay in deficit in 2H FY23; to drive more foreign exchange sell
👉🏼 Currency outflow likely ~₹ 1.5 trillion in 2H
👉🏼 FX reserves likely to🔻over the next few months
👉🏼 Short-term rates could rise
25/n
2023 Outlook: INDIA / Debt
👉 Credit to deposit growth gap has widened significantly, could drive down SLR investments by banks.
26/n
👉 Credit to deposit growth gap has widened significantly, could drive down SLR investments by banks.
26/n
2023 Outlook: INDIA / Debt
👉 SDL supply and hence spreads could stay anchored even in Q4 with multiple tax and non-tax transfers pending from the Centre to States.
👉 State expenditure likely to undershoot budgeted targets by a wide margin.
27/n
👉 SDL supply and hence spreads could stay anchored even in Q4 with multiple tax and non-tax transfers pending from the Centre to States.
👉 State expenditure likely to undershoot budgeted targets by a wide margin.
27/n
2023 Outlook: INDIA / Debt
@SBIMF is positive on debt products.
G-sec valuations are attractive in absolute terms and relatively better than other investment options.
28/n
@SBIMF is positive on debt products.
G-sec valuations are attractive in absolute terms and relatively better than other investment options.
28/n
That was a roundup of @SBIMF’s outlook on 2023.
What do YOU think? Reply and tell us.
❤️ and RT the first tweet if you liked this thread.
Follow @kuvera_in for more insights on investments.
— Fin —
29/29
What do YOU think? Reply and tell us.
❤️ and RT the first tweet if you liked this thread.
Follow @kuvera_in for more insights on investments.
— Fin —
29/29
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