Taking Stock of Experts' Market Forecasts — Market Insights (August 2023)
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Taking Stock of Experts' Market Forecasts — Market Insights (August 2023)

15 Sep
13 Sep

In the beginning

When Endowus conducted a market outlook survey with top asset management companies at the beginning of this year, we saw a few common sentiments among the companies. China’s growth was likely to be the highest among all the major countries and would stay high for the next two years.

Source: Endowus SG 2023 market outlook survey

In terms of market expectations and investment opportunities in equities, emerging markets and China ranked the highest by far, with Europe and US at the bottom.

Source: Endowus SG 2023 market outlook survey

We are almost at the end of the third quarter — so let’s review how the world markets and economies have played out against expectations.

United States

At the start of 2023, there was quite a bit of pessimism with regards to the US economy and, in particular, the aggressive pace of rate hikes that the Fed had undertaken to combat persistent inflation. 

There were more than a few economists and market experts who forecast that the US will enter into a recession in the later half of this year. While there is still time for the economy to turn, the likelihood of a recession has gone down. Banks and other major financial institutions have downgraded the chances of a recession occurring this year, forecasting instead a higher chance of the US achieving a “soft landing”.  

The Endowus 2023 market outlook survey results indicated a 2% gross domestic product (GDP) growth rate for the US in 2023. The July 2023 World Economic Outlook Update report shows the US economy growing around 1.8% in 2023. This is about in line with the estimates. However, Bloomberg reported last week that the Fed may double its GDP growth estimates amid strong data on consumer spending and residential investments. 

In fact, one unofficial estimate has the US expanding a whopping 5.6% on an annualised basis in the third quarter. While this Atlanta Fed tracker is unofficial and volatile, it nonetheless highlights a marked change from previous sentiments.

Source: Atlanta Fed, Bloomberg

The caveat here is that despite the resilience in the economic data and the economy, most economists still expect a significant slowdown in US growth in the fourth quarter of 2023 and into 2024.


August was marked by negative headlines about China’s property sector as Country Garden, China’s biggest home builder, was thrust into the limelight after it missed interest payment on its bonds. Fortunately, Country Garden was able to receive an extension on its payments and avert a default. A few days later, Evergrande, another troubled property developer, filed for bankruptcy in the US.

The Endowus 2023 market outlook survey showed optimism in China, as estimates for the country’s 2023 GDP growth ranged between around 3% and 5%. 

While there have been recent downgrades on forecasts of China’s growth, the July 2023 World Economic Outlook Update report still indicates a 5.2% growth rate in 2023. This is on the higher end of the estimates seen in the Endowus market outlook survey and higher than most other countries. 

However, economists have downgraded Q3 2023 growth from 4.6% to 4.4%, and the Q1 2024 estimated growth rate is now 4.2% versus 4.3% from the previous survey.

How the markets have done

The faith and optimism placed on China and the emerging markets as growth investment opportunities have not really played out as of now. In US dollar (USD) terms, China trailed the other markets by a wide margin, almost detracting by 5% as of 31 Aug 2023. 

The two best major markets for the year on a USD basis have been Europe and the US, for different reasons, while the best major market on a local currency basis has been Japan.

Chart: Year-to-date (YTD) return as of August 2023, of S&P 500 index and MSCI indices including MSCI China, MSCI USA, MSCI World (developed markets), MSCI Europe, MSCI Asia, MSCI EM (emerging markets). NR, USD. Source: Morningstar Direct, Endowus Research

The main lesson from this is that it is really difficult to predict how markets will perform in the future, even for very knowledgeable market experts. We give the best estimates we can at the time, with the most information we can find but circumstances change and the world does not stay static from that point on. 

Without knowing which markets will outperform, the best option would have been to go with a globally diversified portfolio, as depicted in the chart above. 

While an investor would not have performed better than if he had invested solely in the US, he would still have done much better than if he had invested all his assets in the other regions or been overweight in China and emerging markets (which was the recommendation of many experts).

August market commentary

Global equity markets fell in August 2023, reversing the gains from July and ending close to where they were at the end of June. The picture was similar for emerging markets, albeit with larger volatility. The only major market to record modest gains was Japan as measured by the TOPIX. 

In the US, several of the large technology names softened. The US economy has remained impressively resilient, but longer-term worries still linger despite the increased probability of a “soft landing”. 

In Europe, persistently high headline inflation and the larger interdependencies with China — whose outlook dimmed substantially in recent months — were the main drivers of weaker stock markets.  

While the Chinese government took some modest steps to stimulate consumption in July, the consensus is currently rather bleak, and the property market in particular contributed to the decline in August.

In terms of factors, global small-cap stocks underperformed large caps, and value slightly underperformed growth. More generally, quality names as measured by profitability and balance sheet strength, remained stable.

The recent big news in global bond markets was the downgrade of US government debt to AA+ by Fitch Ratings. 10-year government bond yields rose briefly to new highs, but then retreated. The Fed continues to monitor inflation and has not ruled out further rate hikes. 

Concerns about Europe, especially Germany and the UK, drove negative returns and widened credit spreads.

China has become an outlier compared to the rest of the world, with worries about deflation instead of inflation, and the property market being cyclical instead of defensive.

Building a long-term resilient portfolio with Endowus Hong Kong

It is almost impossible to predict exactly how macro events would play out. However, spreading your investments across asset classes and geographies will help with diversifying your risk. With market volatility comes opportunities. If you have a long-term investing horizon, as many of us do, these developments may offer an opportunity through steady, regular investing in diversified and risk-adjusted portfolios.

With digital wealth platform Endowus, you can plan and manage your money — by investing in Best-In-Class Funds and globally diversified, low-cost model portfolios seamlessly.

Click here to get started on your investing journey with Endowus Hong Kong today.

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Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. 

This article is not intended to be relied upon as a forecast or research or investment advice, and should not form the basis of any investment or other decisions. The information contained herein is not intended, and should not be construed, as any legal, tax, regulatory, accounting or financial advice. If you would like investment, accounting, tax or legal advice, you should consult with your own professional advisors regarding your individual circumstances and needs.

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Accuracy of Information

Whilst Endowus has made reasonable efforts to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or errors in any such information. Endowus does not warrant or represent that the information in this article is correct, accurate or reliable. 


Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this article are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. 

In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

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