January surprises
“Welcome to 2023” said the note on the restaurant door. The door was shut, the lights were off, and another note explained that rail strikes meant staff and customers were unable to get there. All the venues in this City-of-London street were closed in a scene reminiscent of the height of the 2020 lockdown. Life can be tough in the battle for a fair share of the economy’s revenue flow, and we cannot have been the only ones left feeling that the UK is off to one of the most subdued starts to a new year we can remember.
December 2022 review
For global investors, December was a suitably drab end to a dreary year. The equity rally which had gained momentum since autumn lost steam coming into the winter months. For sterling investors, global equities lost 4.9% throughout December. This capped off fall of 8.1% for 2022 overall. Once again, rising yields, sharply tighter monetary policy, runaway inflation and slowing global growth conspired to make conditions extremely challenging. The table below shows the monthly, quarterly and year-end results across different asset classes. As you can see, and particularly compared to 2021, it was a pretty frosty Christmas after all.
China’s reopening bounce
Nobody expected a turnaround like this. A few months ago, the prospect of China ending its strict zero-Covid policy seemed like a fantasy. Over the holiday period, the new cabinet formed after the October Congress performed a notable ‘volte-face’. The zero-Covid policy, which placed 1.4 billion citizens under repeated lockdowns for three years, was swept away. The National Health Commission (NHC) also downgraded the threat posed by Covid, announcing that those with positive tests were no longer required to quarantine at a central facility, and that daily virus tallies would no longer be reported. And since the previous weekend, inbound travellers to China no longer have to quarantine after entering the country.
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