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Cash-equity line

* Unhedged Value

About Forecaster

The Forecaster tool allows investors to select a combination of assets, currencies and time horizons of interest for comparison on a risk-return chart. These forecasts are produced by the Multi-Asset Solutions’ Research team at abrdn. We aim to update the forecasts on a semi-annual basis, with the current numbers correct as of February 2023.

Return projections are estimates and provide no guarantee of future results.

For institutional, professional, qualified/wholesale investors only. Not for retail clients.


Regional outlook

The latter part of 2022 saw divergent performance for equity markets. The US terminal rate rose another c150bp, alongside waning recessionary concerns and normalising energy prices. In contrast to 1H2022 which saw similar interest rate rises and double digit equity declines, the most recent rising rates saw DM markets trade broadly sideways and up, with Europe, Australia and the UK posting local-currency returns of 3-6%, whereas China (-14%) and Emerging Market (-4%) struggled. China’s returns were amplified by the regulatory clamp-downs, a property crisis, and the ongoing impact of COVID restrictions.

As we described earlier, little has changed in our paradigm construct, thus our fair-value assessment of most regions has stayed fairly stable. This means that cheaper markets now look more attractive on a total return basis, with China A and Emerging Markets coming at the top of our equity return forecasts with 5Y local currency returns in excess of 9% p.a.. Conversely, we forecast that some of the long-term return has already been realised in the UK and Europe, therefore prospective returns are slightly more muted. With a return of 6.3%, we expect little price-return for the US, owing mostly to the continued elevated valuations in the region despite the recent sell-off. Our assessment of sluggish nominal-GDP growth in Japan continues to drag the prospective equity returns, though we note that demographic shifts are likely to slowly increase productivity growth.

We have also incorporated updates to our climate scenario analysis, which produced divergent results. The latter part of 2022 saw the Energy and Utilities sector perform well, owing to elevated energy prices due in part to the Russia-Ukraine conflict. These sectors are very exposed to the climate transition given their elevated carbon emissions, with the Energy sector in particular having an expected double-digit decline on a 30-year time horizon. Given these sectors now take up a larger portion of global equity indices, the impact on our returns is now slightly more negative than it was previously. The opposite is true in China, where increased policy ambition, particularly in the Industrials sector, has lead to a positive contribution to our expected returns.


Cash-equity line

* Unhedged Value


The cash-equity line serves to illustrate risk-adjusted relative performance. Assets above the line are expected to outperform a portfolio of equivalent risk containing only cash and equities; assets below are expected to underperform.

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