Stock Market Outlook – What’s in Store for 2022
The start of a new year always signals an opportunity to reflect back on where we’ve been, and to look forward to what’s on the horizon.
Here we took a look back at the markets in 2021, and now we’re gazing forward to what’s in store for 2022.
Will this be the year we finally conquer COVID? It’s entirely possible, says Wayne Wachell, Executive Chair Person and Chief Investment Officer at Genus. “The Omicron variant could be the end of the pandemic if it becomes dominant and becomes a cold,” he says. “That would be a great win.”
Other trends to look forward to in 2022 include a continuing acceleration in the economy as vaccines, therapeutics and herd immunity help lift pandemic restrictions, and prolong a strong economy into the first half of the year.
In the second half, look for upcoming interest rate hikes to slow things down. “The Federal Reserve will do three or four rate hikes starting in March,” Wachell says. “We’re at a 40-year turning point in interest rates.”
Wachell also anticipates some volatility in the second half of 2022 thanks to higher interest rates, and China’s overleveraged real estate sector. “Longer term issues are percolating in the background right now, and the market isn’t discounting them,” he says.
Here’s a look at a few of the larger trends we tracked throughout the year, and some we’ll see continue on into 2022.
A Strong Market for ESG and Impact Investing
The trends driving ESG and impact investing are continuing to accelerate, driving sustained growth in sustainable funds and organizations. “The move toward carbon neutral is still big,” Wachell says.
For Genus, this continues to be a significant investment opportunity. “Impact investors now have options that go beyond black and white concepts of ‘bad’ or ‘good’ investments and can truly align their investments closely with their values,” says Shannon Ward, Chief Revenue Officer at Genus. “I’m excited about the maturing of this space.”
Mike Thiessen, Chief Sustainability Officer/Partner at Genus, sees opportunities in sectors that are working to slow the effects of climate change. “I’m excited about the advances in innovation around cleantech and green infrastructure that are being spurred on by a greater sense of climate action urgency,” he says. “The world needs these pioneering businesses and I look forward to helping our clients be a part of this progress.”
Our partners, too, have seen exciting developments in this space, and are looking at the potential for sustained growth in 2022. Graham Day, Investment Program Director at Spring, reports a boost in investor interest in early-stage impact companies. “Much of this interest is stemming from the multiple crises we’ve been facing as a society,” he says, “from the collateral effects of the pandemic, to the local natural disasters brought about by climate change. In 2022, we will be bringing more of these people together than ever before in our impact investor training programs. We think this is crucial to accelerating the movement of impact investing, and thereby getting capital to the innovative solutions that Canadian and international entrepreneurs have to offer.”
Over at SVX, they’re seeing impact investing being used as a critical tool by governments, institutions, and individuals to take action on issues including the climate crisis, housing, and inequality as well as justice, diversity, equity and inclusion at a local, national, and global scale. “As this approach has moved from the margins to the mainstream over the past decade, demand for and adoption of impact investing should skyrocket in 2022 and beyond in a wide range of portfolios, plans, and policies,” says CEO Adam Spence.
For our part, throughout 2022 we’re looking forward to continued work with our existing and new clients in navigating not only the ups and downs of the market, but also in crafting long-term wealth management plans that meet their goals, says Stephen Au, CEO/Partner at Genus. “I look forward to continuing to support Canadians in directing their capital toward companies that are creating a positive impact for our communities and our collective future.”