Status: 03.01.2022 7:09 a.m.
2021 was a dream year for stocks. Experts believe that the stock market should continue to rise in the new year. However, very big leaps are not to be expected – because of the fading flood of money from the central banks.
Corona crisis, Omikron, delivery bottlenecks, inflation almost at a 30-year high, downturn in the German economy – none of that disturbed investors. The DAX rose again by 15.7 percent last year. The most important German stock market barometer marked several new record highs. The mood on Wall Street was even more euphoric. The S&P 500 climbed almost 28 percent and set new highs almost every week.
Review of the year on the stock exchange: a successful year for many investors
12/30/2021 12:12 p.m.
Corona crisis fuels stock market boom
Stock boom in the middle of the pandemic – are the stock markets crazy? No, say experts. “The shares are so high because we are in a crisis,” explains the well-known market observer Robert Halver from Baader Bank. “If we didn’t have a corona crisis, it wouldn’t be so high.” In plain language: In order to contain the crisis, the central banks have pumped massive amounts of cheap money into the economy and financial markets. This flood of money drove the stock exchanges.
This is unlikely to change much in 2022 either. The US Federal Reserve has announced its exit from the ultra-loose monetary policy and a turnaround in interest rates. According to stockbrokers, this normalization will not trigger a major slide in the price. “Central bankers take their foot off the accelerator, but they do not yet apply the brakes,” explains Weberbank analyst Jan Gengel. So no money is being withdrawn from the financial markets.
Central banks are not taking their foot off the accelerator completely
Especially since the European Central Bank (ECB) is still in no hurry to tighten the reins. “Monetary policy in Europe will remain on the accelerator for almost the entire next year,” predicts chief economist Ulrich Kater from Deka. Helaba chief economist Gertrud Traud does not expect an interest rate hike until 2023.
Market strategist Halver is certain: “Even if the monetary gifts are smaller in 2022, there is no risk of a dramatic liquidity turning point.” The loose monetary policy is now likely to have peaked, but the air remains thin, “because we are still in the high mountains”.
The equity strategists are accordingly optimistic about the new year on the stock market. Most expect prices to continue to rise. You trust the DAX to set course records. On average, they see the DAX at 17,068 points by the end of the year. That would be a good 1200 meters more than currently.
The analysts at DZ Bank, MM Warburg and Unicredit even believe that the DAX could rise to 18,000 points. Carsten Klude, chief economist at MM Warburg, justifies this optimistic DAX forecast with the economic upturn. He assumes that the German economy will overcome its problems in 2022. In his opinion, German companies are likely to increase their profits faster than expected.
Few pessimists
The experts at Bank of America disagree. The economic upswing and higher corporate profits have long been factored into the rise in share prices, they say. The experts at the money house are among the few pessimists. They believe that the DAX will drop to 15,000 points next year.
Robert Greil, chief investment strategist at the Merck Finck bank, warns that there will be no similar big leaps as in the current year. “Since the monetary policy support is waning and the pandemic is not over, next year it should come down to a single-digit percentage increase.”
It should actually be bumpy. Investors have to be prepared for a rollercoaster of emotions. “We will see periods of optimism and pessimism about inflation and growth,” predicts Willem Sels, chief investor of HSBC’s wealth management team. Investors would waver between these two poles until the economic outlook became clearer.
Inflation and pandemic are the big risk factors
Inflation is seen as a major risk factor. After rising in November to 5.2 percent in Germany, the highest level in almost 30 years, it is likely to weaken somewhat in the coming months. However, the rate of inflation will presumably remain at a high level. Economist Carsten Mumm from the private bank Donner & Reuschel justifies this with only slowly reducing supply chain disruptions, high energy and raw material prices, the focus of politics on higher wages and state investment offensives.
A flare-up of the corona pandemic and possible new, even more contagious virus variants could also put a strain on the stock exchanges. The worst case scenario would be if a variant emerged that the mNRA vaccines would not protect against. Then there would probably be a risk of a new price slump. However, such a scenario is considered to be quite unlikely. Overall, the markets have now almost got used to new corona outbreaks.
German stocks instead of US stocks?
Most equity strategists favor European and German stocks over US stocks for 2022. The values on Wall Street are already quite expensive, they say. “Compared to US stocks, European stocks are now being traded as cheaply as they have been in the past 20 years,” says Ulrich Stephan, chief investment strategist at Deutsche Bank. In addition, European equities should be hoping for further tailwind from the ECB’s sustained loose monetary policy.
Some equity experts advise against tech stocks in 2022. They prefer substance values with a favorable valuation. “There are many indications that value stocks should do better in 2022,” says Stefan Breitner, head of Research & Portfolio Management at the fund company DJE. Car, steel and real estate stocks are named by individual analyst firms as industry favorites.
Bonds “as attractive as athlete’s foot”
There are hardly any alternatives to stocks in sight in 2022 either. Despite the turnaround in interest rates in the USA and other parts of the world, bonds are unlikely to continue to generate any returns. In many cases, real returns – nominal interest rate minus inflation – are still clearly in the negative range. “Interest savings will remain as attractive as athlete’s foot in 2022,” says market strategist Halver with biting irony.
Is gold losing its safe haven status?
And what about gold? Many experts disagree on this. While some believe the yellow precious metal will jump to over $ 2,000 a troy ounce, others expect prices to continue falling. The tightening of monetary policy in the US and weakening inflation could make gold less attractive. But if the rate of inflation should rise faster than expected or should global debt increase even more dramatically, the precious metal could become a safe haven again.
The last alternative is the crypto currencies. In fact, investors who bet on Bitcoin or Ethereum in 2021 were able to make hefty profits. However, the price fluctuations remain very high here.