2023 Q1 In Review - Integrity Wealth Advisors, Ventura & Ojai, California

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REBOUNDING EMERGING MARKET PROFITS HELPED BY CHINA REOPENING 2022 was a miserable year for both companies and investors in emerging markets. Profits fell 15% (in contrast to solid gains in most developed countries), and the MSCI Emerging Markets Index lost 15%. Over the past five years, the index is down 20%. This picture may be changing for the better. The all-important Chinese economy is now in full recovery mode following the rapid abandonment of highly restrictive anti-pandemic policies at the start of this year. We think that shift will unleash a consumption boom fueled by almost $500 billion USD of surplus savings accumulated during the lockdowns. Many Chinese companies were forced to restructure during the past few years, and they are much better positioned to profit in the recovery. CHINESE HOUSEHOLDS HAVE ADDED MORE THAN 3 TRILLION RMB (USD 500 BILLION) OF SURPLUS SAVINGS. Households accumulative surplus savings 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Jun '16 RMBtr Dec '16 Jun '17 Dec '17 Jun '18 Dec '18 Jun '19 Dec '19 Jun '20 Dec '20 Jun '21 Dec '21 Jun '22 Dec '22 Source: Haitong Securities, National Bureau of Statistics; data as of December 2022 Outside China, we find plenty of growth across emerging markets. The research team from JP Morgan sees higher profits in India, Indonesia and Taiwan this year. Certainly, emerging markets have proved disappointing for quite a while, and the usual political risks have not disappeared. But with profits outperforming the developed world for a change, and valuations still at very reasonable levels despite the recent bounce in China, patient investors may well be better rewarded this year. Source: Global Equity Views | Asset Class Views | J.P. Morgan Asset Management (jpmorgan.com)
SINCE MARCH 2020, WE HAVE SEEN: 2023 Q1 IN REVIEW 1. Largest Pandemic in over 100 years 2. Over $4 Trillion in printed Stimulus 3. Interest rates lowered to 0% over night 4. Interest rates rising at their fastest pace in history 5. Inflation at its highest in 40+ years 6. Closest we’ve been to another World War (WW3) 7. Oil prices go from negative to $100+ with record high gas prices 8. Largest crypto bear market in history 9. Record High Credit Card Debt of $986 billion 10. Most unaffordable housing market in history 11. 2nd and 3rd largest bank collapse in US History If you started investing in 2020, you have seen more historic events than most people see in 20+ years. CRISIS & EVENTS: 1970-2022 THE AVERAGE ANNUAL TOTAL RETURN OF THE S&P 500 INDEX FOR THE PERIOD SHOWN BELOW WAS 10.46%. Source: Source: Bloomberg, First Trust Advisors LP., 12/31/1969 - 6/30/2022. Past performance is no guarantee of future results. This chart is for illustrative purposes only and not indicative of any actual investment.
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2023 Q1 In Review - Integrity Wealth Advisors, Ventura & Ojai, California

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