Come 2022, the global economy will be moving into the third year since the onset of the COVID-19 pandemic. As governments and businesses gradually migrate their tactics from coping with a pandemic to an endemic, emergency stimulus is being reined back, which will shift the investment landscape in 2022.
Overall, we believe that staying invested remains crucial. The global recovery should continue to benefit risk assets such as global equities and corporate credit. However, rich valuation would mean there is a slimmer margin of error, and active selection in region and sector is even more critical.
Where are we in the economic cycle?
The answer varies depending on where we are in the world. Overall, we believe the global economy is still in the early to mid part of the economic cycle. The fastest recovery growth phase is likely to be behind us in developed economies such as the U.S. and Europe, but it is still accelerating in Asia and emerging markets.
We believe China’s growth rate could start to stabilize in 1H 2022 with modest fiscal and monetary stimulus. Domestic demand and services could replace exports in delivering growth for China in 2022.
In the U.S., We continue to believe the Federal Reserve’s (Fed’s) policy decisions would be driven by the progress of its economic recovery.
Overall, we expect to see the impulse of global growth shift from developed economies to Asia and select emerging markets.
What are the key political events to watch out for?
What changes are likely for China’s economic model?
On the minds of Chinese policy makers are long-term challenges such as environmental sustainability, low population growth, greater self-sufficiency in technology output and financial stability. To tackle these issues, corresponding initiatives have been introduced, related policies.
Admittedly, these policy initiatives may help China reset its economic model and improve growth potentials in the long run. However, Since July 2021, the intensive regulatory actions and property market curbs have weighed on domestic investment and consumption. Hence, policy easing is expected in 4Q 2021 and 1H 2022 to stabilize the economy, although the scale could be moderate.
Moving into 2022, credit conditions in the domestic property market may continue to improve to support first-time home buyers and housing construction projects. Compared with 2021, Chinese export growth is likely to slow as Southeast Asian exporters recover from the pandemic and take some of China’s share in global trade. Domestic demand may become the major growth driver in China’s economy.
In 2022, investors should consider the sectors with ample policy tailwinds. This implies decarbonization and new energy, self-sufficiency in technology hardware and resilient domestic technology supply chains should be the major themes to follow. Meanwhile, opportunities may appear in the consumer staples and services sectors when growth stabilizes and valuations still remain attractive.
When will inflation come down?
we would expect headline inflation around the world to come off the highs of 2021, but the undercurrent of firmer inflation could continue. Likewise, inflation in the U.S. is expected to come down from the 5-6% range. However, given the strong recovery momentum and some supply-side and labor market distortions, core inflation could remain above the Fed’s target of 2% for much of 2022. This could pressure the Fed to more seriously consider raising interest rates before the end of 2022.
Would central banks turn more hawkish?
As the bright spot of growth moves around the world, we expect developed market central banks to turn more hawkish first. Asian central banks could be more willing to wait for an economic rebound to take shape before they consider raising policy rates. Despite the prospects of higher policy rates and government bond yields in the next 1-2 years, real interest rates are likely to remain low or even negative in some cases.
How should Asian investors allocate to equities, fixed income and other assets?
Since the global economy is still in the early (for Asia and selected emerging markets) and mid (for the U.S. and Europe) parts of the economic cycle, risk assets such as equities and corporate credit are likely to, on a risk-adjusted basis, outperform conservative assets such as fixed income and cash.
For equities, international diversification remains key. The emphasis can shift gradually from developed markets, such as the U.S. and Europe, back toward China and Asia. China is still going through an economic slowdown brought on by policy changes and regulatory reforms. These underlying conditions are unlikely to change drastically in 2022, but the underperformance of Chinese equities in 2021 has already factored in some of these challenges. Moreover, there are sectors, such as decarbonization and import substitutions, that can enjoy policy tailwinds. Rising vaccination rates across Asia should allow for a more sustained domestic recovery and potential for earnings upgrade as the region’s governments adopt their strategies to live with COVID-19.
$SPDR S&P 500 ETF (SPY.US)$ $Dow Jones Industrial Average (.DJI.US)$ $CSI 300 Index (000300.SH)$

$NIO Inc (NIO.US)$ Chinese premium electric vehicle maker Nio’s stock (NYSE: NIO) has declined by about 19% over the last month, considerably underperforming the S&P 500 which remained roughly flat over the same period. The decline follows the company’s lighter than expected delivery guidance for Q4 (see below) and broader selling pressure in U.S. listed Chinese stocks after ride-hailing firm Didi Chuxing indicated that it intends to delist from the NYSE less than six months after going public, amid regulatory pressures in both the U.S. and China. However, the longer-term outlook for Nio hasn’t really changed in our view, and the current issues appear to be only transitory. Demand for EVs in China remains strong, and Nio is looking to bolster its production capacity at its Hefei plant to 240,000 vehicles a year by the first half of 2022. The company is also expanding its product line, with its first sedan, the ET7, likely to begin deliveries as soon as the first quarter of next year, with two other models also in the pipeline for a 2022 launch. This should set Nio up for solid growth in the coming years.

$Citigroup (C.US)$ Citigroup and UBS strategists pointed out in this week's report that the American depositary receipts (ADRs) of Chinese companies traded on the New York Stock Exchange and Nasdaq are "over-adjusted," and it may be time to start bargaining. Citigroup’s Alicia Yap said that the market is currently overestimating the corporate risks in China’s concept stocks. Yap also added: We believe that for those large depositary stocks that have been listed in Hong Kong, China and the United States, this sell-off is a good buying opportunity.
$Alibaba (BABA.US)$ $Tencent (TCEHY.US)$ $NIO Inc (NIO.US)$

$NIO Inc (NIO.US)$ NIO DAY > any risks
lets see this thing run !

$BABA-W (09988.HK)$
For anyone who is farmilar with Chinese internet sector would know, Alibaba/Tencent basically play the roles of venture capital in China. Any startup would either take capital from Alibaba or Tencent(including futu, nio, xpeng, bilibili, you heard of not heard of). Saying Alibaba owning half of the entire industry is not an exaggeration. A conservative valuation of baba should be between 2t~3t. Baba had been hiding its worth in the investments the whole time. These investments are not showing returns, does not means the investments does not worth anything, it is quite the opposite.
So why it is currently trading at 1/10 of its real value and the stock still being hammer and shorted? There must be something going on here right? cpp wants to buy shares or something? shaking off certain investors?
Instead of monitoring day to day stock prices, this got me more curious.