2022 concludes as one of the most complicated years for global markets. Once again, the month of December saw losses in both fixed income and equity markets, maintaining the year's positive (downward) correlation between both categories and offering few protection alternatives for investors. The abrupt increase in interest rates to combat inflation, as well as geopolitical tensions, were the main causes of the uncertainty experienced during the year.

As a result, the main American stock indexes, the S&P 500 and NASDAQ, ended the year with returns of -19.44% and -33.10%, respectively. Similarly, the world stock market index (ACWI) showed losses of -19.80%, while Mexico was one of the most defensive regions, accumulating a return of -4.18% in dollar terms.

Similarly, the main US Aggregate and US Corporate debt indices accumulated losses of -13.01% and -15.76% throughout the year. A traditional 60/40 portfolio (60% S&P 500 and 40% US Aggregate) had its worst year since the 2008 financial crisis, dropping -16.87%. Moreover, there has not been a year since 1974 in which both asset classes, equities and debt, showed simultaneous losses.

Turning to the rest of the world, the Russia-Ukraine conflict continues to weigh on European economies, with Britain officially entering a recession and with a high probability that more countries in the region will enter one during 2023. In China, meanwhile, they ended the restrictions caused by Covid zero policies, thus improving the growth outlook for that region during the year, while the Japanese Central Bank surprised the market by raising its benchmark rate by 25bp during December.

Finally, while growth is expected to slow globally, with the United States, Europe and Mexico growing only 0.5%, 0.5% and 1.0%, respectively, during 2023, let us remember that stock market cycles normally move forward, bottoming out, before economic activity does. Because of the above, coupled with more attractive valuations and higher rates that benefit savers, we at Grupo Inversión expect better returns for our clients in the coming year.