Opportunities on the capital market? These are the banking forecasts for the year 2023

Deutsche Bank: Opportunities for equities and real estate

Deutsche Bank gives up in its Capital market outlook 2023 relatively optimistic about the coming year. The expected recession in the USA and Europe is likely to be somewhat milder than expected, but inflation is expected to remain high for now. Analysts therefore expect medium, single-digit returns on the equity markets and see the DAX at 15,000 points at the end of 2023, the S&P 500 at 4,100 points and the Stoxx 600 at 445 points.

With regard to the real estate market, Deutsche Bank predicts that prices will stabilize at a high level. The motto applies to all real estate segments: the more sustainable, the better. Energy-efficient properties would sometimes have price surcharges of 20 percent. Energetically renovated or newly built apartments and houses are more in demand than other properties. The energy crisis is a catalyst for energy-efficient construction.

J.P.Morgan: Revenue opportunity of the decade

The recent political and economic crises have led to severe turbulence on the equity and bond markets. But J.P.Morgan's future outlook is all the more brilliant: Analysts assume that long-term return opportunities are very good. Especially when it comes to bonds and equities: “The earnings prospects over a period of ten to 15 years are as good as they have been since 2010,” said an expert. Specifically, J.P.Morgan expects income of 9.3% p.a. for small caps and 8.4% p.a. for standard stocks for Eurozone equities. The forecast is based on the assumption that the global economy will grow by 2.2% per year over the next ten to 15 years. And that at an inflation rate that in the EU and the USA is around the target of two percent as announced by the central bank.

Saxo Bank: Completely crazy forecasts — with a spark of truth

Every year, Danish Saxo Bank divides minds with its “Outrageous Predictions” - a compilation of relatively unlikely yet possible forecasts for the coming year. Because Outrageous Predictions are sometimes so visionary that they almost sound crazy. In fact, the theses mentioned therein typically only have a probability of occurrence of just one percent. That is why Saxo forecasts are primarily intended to broaden the view of what is not exactly likely, but still possible.

For the coming year, the financial institution paints a rather mixed picture, but one that could also open up opportunities for investors. Saxo Bank, for example, predicts that inflation is likely to keep us busy for a long time to come. According to the Danes, the anti-inflation measures in 2022 were taken rashly and haphazardly. “Everyone is talking about taxing the higher profits of energy companies, while governments are failing to rely on the tried and tested means of supply shortening. Instead, they are boosting demand even further by setting a cap on heating and electricity prices.” However, after a weak year 2022, investors could once again focus on gold as inflation protection in 2023.

Alternative tangible asset investments as inflation protection

On the other hand, no financial institution dares to say whether and when simple interest savings with a call money account, fixed-term deposit or savings account will be seriously considered again as an investment alternative. Even the ECB's expected further interest rate hike in 2023 to combat inflation will not change that. Investors should therefore hedge their portfolio against potential financial market risks now and take advantage of potential return opportunities.

For example, should Real estate remains sought after and expensive as “concrete gold” - despite slight price declines. This is because continued high demand, particularly in major cities, is offset by continued low supply. In major cities such as Berlin, Frankfurt, Munich and Cologne, the number of completed apartments has recently fallen. The upscale and luxury segments are also less dependent on the level of construction interest rates, as equity is often used.

In addition to real estate, Collectibles such as luxury watches, art, fine wine, classic cars or instruments an attractive asset class. Because their correlation with financial markets is very low, which is why the prices of Fine Wine, for example, only knew one direction last year: upward. They prove that Liv-ex Fine Wine Indices, which achieved high one to double digit returns instead of losses in 2022. The situation is similar with Art as an alternative investment: The All Art Index won over 25 percent within the past twelve months alone.

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