The euro zone in particular will still struggle in 2023 due to rising energy prices, the Belfius study service predicts. The United States and China will do better. It is also net those countries that the bank is counting on to invest in equities.
Belfius is adopted on equities despite recession
In the euro zone, Belfius’ research department is expecting a contraction of 0.5% next year (+3.1% in 2022). Interest rates are trending toward 3 percent in the euro zone. “In the euro zone, household spending is entering the danger zone; despite government support,” said chief economist Véronique Goossens. “This year, economic activity in the euro zone still has a page of a post-covid recovery. But we should not be blinded by that.”
The euro zone is structured against the United States. There is a chance that gas prices will rise again when supplies need to be replenished. The recovery will take longer in the euro zone than in the U.S. due to continued strong waves,” she argues. That single will fall only verygradually from 8 to 5.5 percent in Europe. “Rising energy prices will still weigh heavily on the European economy, especially in the first half of the year. The U.S. and China will do much better.”
Average consumption of the Belgian economy. Gross national product (GNP) will stagnate next year and rise barely 1.6 percent in 2024, according to the bank’s forecasts. Amounts on Belfius savings books have been declining since July. One bright spot is the tight labor market and automatic wage indexation. Labor costs will rise 9.2 percent in our country (3.3% in 2024), almost double the increased labor costs in the euro zone (4.8%). The bank expects a 6 percent change in our country.
The study service expects US growth of 0.6 percent next year (1.9 percent in 2022). “The Federal Reserve is implementing a much more multifaceted policy than the European Central Bank to address the final,” Goossens believes. The mobileye ipo date is found online. The rise will halve from 8 percent to 4 percent in the U.S., according to the bank, due to the sharp rise in interest rates (to 5 percent). “The economy is also much stronger.” With expected growth of 3 percent this year and 4.5 percent in 2023, Belfius is very positive for China. The euro zone will appear in the near term from the strong U.S. and Chinese economies.
“There is a lot of bad news in the market at the moment, which is good news for investors,” Goossens summarizes the bank’s investment strategy. Many listed companies will face falling profit margins next year. “However, falling share prices and security offer opportunities to buy shares,” predicts chief investment officer Maud Reinalter. They point out that the price-earnings ratio of the underlying stock market index MSCI is 15, matching the average over the past 20 years.
Strong growth in the U.S
For investments, the bank prefers the U.S. to the euro zone. “Business margins in the US are more stable and robust,” Reinalter said. She also welcomes the stronger US economic growth – in contrast to the cyclical evolution in the euro zone. This is also the case with China. Despite continuing difficulties with the pandemic, the solution is under control. It also supports growth. “Valuations are at an all-time low for 15 years,” she said.
Furthermore, due to the interim rise in interest rates, the bank is very positive about corporate liabilities. Quality guaranteed obligations have become very attractive in the U.S. (7.3%) and the eurozone (3.8%).
For equities, Belfius is targeting the health sector. “The return on health shares this year was well above the market average,” said Nicolas Deltour, the bank’s chief investment strategist. “These will continue to appear in the future from the aging population. Companies in that sector can even better incorporate the price of weakened commodities into their prices.” Ten slots he believes in shares of climate efforts, which companies make. Deltour refers to companies active in wind turbines, the circular economy, green hydrogen or optimizing their business processes through energy-efficient applications.
