Which Market Will Grow in 2022?

 Which Market Will Grow in 2022?

While China's economic data released on March 15 were better than expected, they

do not capture the significant headwinds imposed by the COVID-19 case, which has

shut down the country since March 14. China's National People's Congress in early

March to set an official growth target for 2022 of 5.5%. The Vanguard Global

Investors (VGI) maintains its forecast of 5% growth.

Emerging industry stocks

Investing in stocks from emerging markets offers investors exposure to fast-growing

economies and leading global companies. In addition, many emerging companies

are relatively cheap compared to their developed-market peers. Diversifying your

portfolio with these stocks may also provide you with the potential to generate

significant alpha. In recent years, portfolios anchored by the MSCI Emerging Markets

Index have generated higher risk-adjusted returns.

For investors who are willing to take risks, investing in emerging industry stocks is a

great way to invest in the future of the world. Consumers are increasingly becoming

committed to a cleaner and fairer world, and they are increasingly interested in

companies that are socially responsible and eco-friendly. In addition, many

emerging-industry companies are focusing on environmental and social causes,

which is making them attractive to early investors.

Emerging market countries are home to more than 80 percent of the world's

population, and they drive nearly 80 percent of global GDP growth. While China is

the most well-known of these markets, dozens of other countries are showing

impressive growth as well. These countries are growing thanks to improved

education, technology, and a more market-friendly policy environment. These

advantages translate into growth for companies that do business in these countries.

DM rates market

The DM rates market is set to grow in 2022, thanks to pent-up demand from

emerging markets. While inflation in most DM economies is projected to settle

around half a point above pre-pandemic levels, the underlying fundamentals are

more ambiguous. Most central banks have altered their goals to reflect higher

inflation and are therefore more likely to raise their neutral real rates in the near

term. In addition, political tolerance for budget deficits is increasing in relation to

climate-related investment needs.

Global growth prospects are improving. Most developed markets are expected to

grow at more than 3% in the next year. However, the gap between the U.S. and DM

rates markets is still large. Nevertheless, the dollar should weaken as a result.

Further, the lockdowns to combat COVID-19 are expected to subside. This should

help the DM rates market grow in 2022.

Energy sector

There's a lot of uncertainty in the energy sector, but there are several reasons to

believe that the sector will grow in 2022. The first reason is that the energy sector is

crucial to the global economy, providing power and fuel for trade and travel. As

such, a slowing economy can significantly weigh on energy stocks. Conversely, a

growing economy can spur energy stocks.

Renewable energy is one of the major drivers of this growth. It's expected that 2022

will be a record year for switching to renewable energy. Likewise, the use of other

exotic energy sources will become a reality. Furthermore, government policies are

likely to help or hurt the industry. The latest government initiatives could encourage

the use of clean energy sources.

Wind and solar power are the fastest-growing renewable energy sources. They will

make up almost 20 percent of the total electricity generation in the United States in

2022. Other renewable energy sources include geothermal, hydropower, and

biomass.

Real estate

Home prices are expected to rise in 2022, despite the fact that interest rates

continue to climb. This will attract investors and buyers looking for higher returns.

However, rising mortgage rates will challenge their ability to earn those returns.

With this in mind, investors should consider buying homes in under-represented

markets.

According to Zillow economists, the housing market will continue to see strong

demand. More millennials and Gen Zers are expecting to buy second homes.

Additionally, the renovation boom will continue. This should push the home-building

industry to thrive in 2022. In addition, the economy will continue to see low

inventories, which is a positive sign for home buyers.

According to Zillow, the housing market will remain hot through 2022, but

competition and prices will moderate relative to the past year. Zillow also predicts

that home values will continue to rise, but not as fast as they did in 2021. This is

largely due to the fact that millennials are reaching the prime buying age and older

generations will continue to be behind.

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