Euronews Business takes a closer look at what investments are most likely to yield in the new year, amidst various uncertainties in the global economy.
2023 was a roller coaster of a year for the markets, fuelled by rate-cut expectations from the US, the UK and Europe, global tensions erupting in the Middle East and, not least of all, disappointing news from China’s economy.
The best bets of 2023 seemed to be made around the tech sector**, led by giants such as Nvidia** and Alphabet benefiting from their AI prospects, while cryptocurrencies and stocks of weight-loss drugs have also had huge gains in 2023.
But what is the best bet for 2024?
European equities and crypto are expected to rise while commodities could be among the most disappointing investments in 2024, according to BCA Research’s outlook. It believes AI may also lose some of its steam.
A mixed global outlook may drive investors' hands
A key driver of investment decisions this year is when leading central banks the US, the UK and the Eurozone are expected to cut rates.
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"Growth stocks in particular are likely to keep benefiting from this renewed enthusiasm given that they have suffered in a higher interest rate environment," Head of Money and Markets at Hargreaves Lansdown Susannah Streeter told Euronews Business.
"Hopes for a softer landing for the US economy could also help companies selling discretionary products in the US market. However, given that the full impact of interest rate hikes is yet to be felt, there is still a chance that it’ll be a bumpy way down from peak rates."
Others forecast a lot murkier outlook for the global economy, the growth of which has been around 3% in the last two decades. However, output is expected to fall lower for the longer term, as the main contributor to the global economy, China, is battling a serious property crisis within its own economy.
Dhaval Joshi Chief Strategist at BCA Research told Euronews Business that no sector could replace entirely the missing output of the $100 trillion Chinese real estate market, which is worth a staggering six times the $18 trillion Chinese economy.
"The end of China's housing boom means the end of the world's main growth engine," said Joshi. "So it's at least 25% and that's been the main engine of Chinese growth, but that's also been the main engine of world growth."