Turning the page: 2023 review and portfolio positioning for 2024

economictimes.indiatimes.com:

global markets, characterized by unexpected economic resilience in some regions and challenges in others. The year began under the shadow of slowing growth and recession concerns in major developed markets and, as it progressed, saw considerable inflation uncertainty, the war in Europe, and a new geopolitical flashpoint in the Middle East. Yet, by the end of the year, global equity markets, including India's, had soared to new heights, and the US Federal Reserve has given the markets a sugar rush by indicating a glide path to lower interest rates.
The inescapable conclusion, as we hope our readers will infer, is that adhering to the fundamental principles of asset allocation remains the most preferred approach to investing. In this article we review the recent performance of key markets and portfolio strategies, and the optimal positioning for 2024.

Diverging Economic Fortunes

The US economy demonstrated unexpected resilience, successfully weathering regional banking issues, geopolitical tensions, political dysfunction, and steep rate hikes. Europe, on the other hand, grappled with the repercussions of the Russia-Ukraine conflict, teetering on the brink of recession. China's growth waned under the weight of structural challenges like the real estate debt crisis. Interestingly, inflation, rather than growth, emerged as the key market driver, influencing market movements on both its actual trajectory and expectations.

Equity Markets: The Unexpected Heroes

Global equities, particularly in the US, outshone expectations, lifted by a rally centered on the «magnificent seven,» the top US technology stocks, bolstered by the hype surrounding artificial intelligence. The Indian market was also among the top performers, driven