2024 is gonna be a very good year, says Standard Chartered

Standard Chartered

The year 2024 is expected to have challenges for the global economy as growth and inflation slow down in the US and other major economies but there are still opportunities for investors to sail with the wind and achieve their financial goals, according to the latest Market Outlook Report for 2024 from Standard Chartered.

Standard Chartered is a leading international banking group with a presence in more than 60 markets and a focus on Asia, Africa and the Middle East. The Bank offers a range of wealth management services, including local and international advisory, property management, the entry level SC Shilingi Funds and the recently launched Signature CIO Funds. The Bank also has a new holistic investment framework, SC Wealth Select, that enables clients to build strategic portfolios to protect and grow their wealth.

The Market Outlook Report for 2024, titled “Sailing with the Wind”, is a compilation of views by the Bank’s Chief Investment Officer outlining the Bank’s investment strategy for the year ahead. The Report identifies the key themes and opportunities for investors in 2024, as well as the potential risks and challenges that could arise.

The Report finds that the US and other major economies are likely to witness sharply slower growth and sliding inflation in 2024, as the effects of fiscal stimulus fade and monetary policy tightens. The Report expects the US economy to grow by 2.2% in 2024, down from 5.6% in 2023, and the eurozone economy to grow by 1.4%, down from 4.6%. China’s growth is also expected to moderate to 5.5%, down from 6.1%.

This slowdown in growth and inflation has implications for equity and bond markets, which are expected to start 2024 positively, supported by hopes of a soft landing and central bank policy shifting towards supporting growth. The Report expects global equities to deliver 8% returns in 2024, led by the US and Japan, and global bonds to deliver 2% returns, with a preference for high quality Developed Market government bonds, particularly with longer maturities.

However, the Report also warns of the potential risks and challenges that could lead to a harder landing scenario, such as a faster-than-expected rise in interest rates, a resurgence of COVID-19 variants, geopolitical tensions, or policy missteps. In such a scenario, the Report advises investors to diversify their portfolios, hedge their currency exposures, and seek defensive and alternative assets.

For Kenyan investors, the Report suggests that they should anticipate more stability in lending rates, even as expected fluctuations in forex and the tax environment continue to shape the operating environment. The Report expects the Central Bank of Kenya to maintain the policy rate at 7% in 2024, while the Kenyan shilling is expected to depreciate slightly against the US dollar, reaching 115 by the end of 2024. The Report also notes the ongoing fiscal challenges faced by the Kenyan government, which could lead to further tax reforms and debt restructuring.

Against this backdrop, the Report identifies the most attractive asset classes and sectors for Kenyan investors, based on the Foundation and Opportunistic allocations suggested by Standard Chartered. The Foundation allocations are a model that can be used as a starting point for building a diversified investment portfolio, while the Opportunistic allocations look to take advantage of stock and sector dispersion to capture short term opportunities.

The Report recommends that Kenyan investors should allocate 40% of their portfolio to equities, 40% to bonds, 10% to cash, and 10% to alternatives. Within equities, the Report favours the US and Japan markets, as well as the communication services, technology and healthcare sectors. Within bonds, the Report prefers high quality Developed Market government bonds, especially with longer maturities, as well as emerging market local currency bonds. Within alternatives, the Report suggests investing in gold, real estate, and private equity.

The Report also introduces the new holistic investment framework, SC Wealth Select, which allows customers to review and allocate assets in line with their today, tomorrow and forever goals and in response to the investment climate. The framework helps customers to define their risk appetite, time horizon, and investment objectives, and then provides them with a tailored portfolio that matches their profile. The framework also offers regular reviews and rebalancing to ensure that the portfolio remains aligned with the customer’s goals and the market conditions.

Investing in 2024 is likely to be influenced by the evolution of the macro scenario, which is expected to be challenging but not hopeless. Investors should carefully consider their investment objectives, matching them against long term investment horizons and focus on building portfolios that can weather drawdowns in their portfolio. Standard Chartered believes that investors can sail with the wind in 2024, by following its investment strategy and taking advantage of its wealth management services.

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