On the first trading day of the year, I would like to give you a big gift, an outlook and analysis of the 2023 stock market. Today's post is quite long and is divided into 5 parts:
Overview of 2022
II. The power of cycles
III. Interpreting Economic Policies
4. Looking back on 2019 and looking forward to 2023
5. Potential risks and long-term trends
I. Reviewing 2022 trends
In the past 2022, A-shares generally followed an N-shaped downward trend. Reviewing the reasons for the year-round decline can be mainly divided into external factors and internal factors. The external causes are mainly the return of the US dollar due to continuous sharp interest rate hikes by the Federal Reserve. Combined with the impact of the Russian-Ukrainian war, the return of the dollar intensified and capital risk aversion increased.
There are also two reasons for internal factors. When it first triggered the general market decline, upward momentum was lacking due to the collapse of group stocks at a high level. Later, the epidemic repeatedly exceeded expectations, seriously affecting the fundamentals of the domestic economy. These reasons are combined. Not only did A-shares and Hong Kong stocks fall throughout the year, but most of the world's major stock markets also declined throughout the year. The Nasdaq fell 33% for the whole year, the worst year since 2008.
Looking back at the general market trend of A-shares, the trend in 2022 is actually quite similar to 2018 and 2012. After these two years, in 2019 and 2013, the stock market both ushered in a restorative upward trend.
II. The power of cycles
The reason we need to compare past years with 2022 is because history doesn't simply repeat itself,...