Last Updated: 01/02/2023

From renewables to hybrid robo-advisors: Top investment trends to look out for in 2023

The year 2022 witnessed a worldwide economic slowdown and various industrial collapses. With geopolitical tensions rising and worldwide financial downturns hitting their peaks, economists predict a global recession in 2023. Although the world’s economic situation seems dire, investors are looking at a handful of trends to keep their heads above the water.

Investors are eyeing the macroeconomics of the world for critical indicators of future performance as the U.S. dollar’s strength falters and emerging economies gain ground post-pandemic. Last year’s trends of affirming bets on one currency are making way for trends in diversification. Businesses and currencies more resistant to the upcoming recession will be the winners of this year’s race.

Inflation and slowing economic growth will affect the future of investment, as the recession leads to mass unemployment and collapse in formerly-secure industries such as tech and development. However, with advancements in AI and growing concern for climate change, some technological fields will thrive more than others.

All of these aspects are important to weigh in on, but there are many other details investors need to know about when preparing for the upcoming challenges. So before diving into the new year’s investments, here are some trends you should pay attention to.

Global currencies and outlooks

The global outlook coming into 2023 comes with many new and surprising variables on top of pervasive recession fears. Among notable trends are the declining reliability of the greenback, China’s reopening and reemerging Asian markets.

S&P 500 stocks have fallen significantly since their peak in September 2022, and the U.S. dollar is reaching the end of its decade-long bull run. Investors no longer see the currency as the haven it once was during the worse of Russo-Ukrainian geopolitical conflicts. Rate differentials between the dollar and other major currencies are not likely to deepen, and thus investors are considering other growing currencies in its wake. Some notable options include the rising Chinese yuan, the Swiss franc and the Japanese yen, with various currencies catching up to the dollar as well.

China reopened its doors to the world in 2022, bringing in a new set of joys and woes for the global economy. Some economists are hopeful that the economic giant’s reemergence will soften the risk of recession, while others note that its rising demand for commodities may further increase inflation. Analysts expect the Chinese economy to rebound quickly from its meager three percent growth last year. The yuan already saw a six percent growth since last November when the country announced it would remove its zero-COVID policy in December.

Following China, Asia’s outlook is performing better than expected thanks to the economic giant’s reopening. Investors can expect solid growth in ASEAN countries, an area that has been demonstrating resilience against post-pandemic financial hurdles. Analysts predict a respectable 4.4 percent economic growth in countries like Singapore, Malaysia, Indonesia, Thailand, Vietnam and the Philippines. 

Resisting and diversifying

As the financial landscape becomes increasingly volatile, investors are hedging their bets on risky assets and turning towards companies with stronger balance sheets and more consistent earnings. With formerly popular tech giants like Facebook and Tesla facing massive drops, investors should focus on assets that are reliable and resistant to recession imbalances.

Analysts also advise diversifying portfolios in the coming year. As the worldwide economic slowdown will likely remain due to rising inflation and unresolved geopolitical tensions in Europe and Asia, mitigating damages by spreading out investments will lead to a more robust portfolio later in the future.

Some notable assets to spread investments towards include bonds, stocks and real estate. Cryptocurrency is currently a high-risk asset, having suffered a significant drop in value after FTX’s collapse late last year. However, government regulations may see it regain footing. Investors should be wary regardless and analyze their assets carefully.

Another thing to consider in future investments is the consistency of dividends. While the equity market may falter in the coming year, dividends remain a reliable addition to further returns. Therefore, investors should consider prioritizing companies with adequate income to pay off their dividends. 

 AI in trading. (Unsplash/Stephen Dawson)

Hybrid robo-advisors

A notable new trend in the investment field comes from robotic financial advisors. Various hybrid robo-advisors emerged to consolidate human advisors with technological advancements. They provide additional support from the algorithmic analysis of economic trends.

Hydro robo-advisors analyze investors’ patterns and give them further options to optimize their strategies. Often, these strategies are calculated based on simple questions regarding the investors’ current financial situation.

Unlike traditional robo-advisors, hybrid robo-advisors come with human advisors to guide those new to the technology. The human advisors may also provide more personalized support through various applications, such as a video conference or a phone call. These hybrid services are often much more affordable than regular financial advisors due to their ease of access.

These hybrid robo-advisors ease the work of their human advisors while also providing a cost-effective solution for smaller companies. The technology can manage and rebalance investment portfolios, monitor assets and assess or plan taxes. Companies and investors will likely look to this technology for more solutions in their financial future.

Sustainable technology

While tech stocks are experiencing massive drops, sustainable technology is likely to experience growth in the face of global climate concerns. After a series of climate-related catastrophes and Europe’s energy crisis came to a head in 2022, more and more governments worldwide have begun instating renewable energy policies that will further the technological sector and, hopefully, push its development forward.

Over the years, the world’s climate has made the Paris Agreement’s goal of 1.5 Celcius less achievable. Middle Eastern governments like Qatar believe that gas will still be necessary for developing countries, such as those in Africa. It’s still difficult to decide where the push for renewable energy and sustainable technology will hit its peak.

However, a major milestone that may propel the sustainable technology movement has been set. The United States of America implemented the Inflation Reduction Act in 2022, one of the most significant investments in renewable energy to date. The Act will lower the increasing costs of renewable energy and, thus, set aside one of the major hurdles most companies face when using environmentally-friendly alternatives to fossil fuels.

Therefore, this year may see the rise of more sustainable technology, such as electric cars and solar panels, in the wake of a global bid for a green future. While companies like Toyota and Tesla lead this sector, other vehicle companies may enter the market in the coming months.

While many factors have softened the threat of recession, the world’s economic slowdown is inevitable. Recent trends have focused on studying the state of the world and observing what dynamics will form in the financial space.

The best advice analysts can provide is to look into emerging markets across the globe, diversify portfolios with more resistant assets, consider emerging technology in assisting financial analysis and look towards a more sustainable future.