Market Watch | The 5P’s to Keep an Eye On in 2022
11 February 2022
If the month of January was any indication of how markets would behave for the rest of 2022, it’s probably going to be volatile. Here are the key watchwords beginning with the letter ‘P’ that investors may be hearing a lot of this year.
Omicron is a reminder to markets that COVID remains a clear and present risk. Investors got a sense of déjà vu all over again as the more infectious strain triggers renewed lockdowns in parts of the world. However, the reopening theme should continue to sustain because of higher vaccination and low mortality rates.

A stronger medical arsenal in dealing with the pandemic will also help bolster efforts towards reopening. This includes Pfizer’s new antiviral pills that has shown promising signs in preventing deaths and hospitalisation. Recently, the oral pills was granted approval by the US Food and Drug Administration (FDA) for home use last year. 

A subsequent full approval and a wider manufacturing rollout would aid global efforts towards stemming future infection waves and hospitalisations. Canada became the latest country to approve Pfizer’s COVID pills for mild to moderate cases in adults. This could set the tone for a firm transition to an endemic phase where the world learns to live with the virus globally.


After an exceptionally strong year of economic growth and earnings upgrades in 2021 where businesses clambered to meet renewed demand, this pace is expected to normalise in 2022. However, growth rates are still expected to remain above trend which would support valuations. 

Recovery could also be uneven across different regions with developed markets (DMs) expected to outperform emerging markets (EMs), as DMs adopted a more aggressive stimulative stance to combat downward pressure arising from the pandemic in the form of rate cuts and handouts.
2022 will also see major policy shifts taking place. Firstly, the US Federal Reserve is embarking on an aggressive tightening path to tamp down inflation which has surged to new highs. At a congressional hearing, Fed Chair Jerome Powell said that the Fed was determined to ensure high inflation did not become "entrenched." 

Fed funds futures are pricing-in a 90.0% chance of a rate hike in March 2022 with another 3 more rate hikes expected for the rest of 2022. The Fed is also seeking to accelerate its tapering of bond purchases to shrink its balance sheet which ballooned at the onset of the pandemic when the Fed injected massive stimulus to keep the economy afloat. With inflation rising and signs of recovery in the labour market, the Fed is now thinking of withdrawing stimulus which could unnerve markets. 

A key inflection point for markets to turnaround is when inflation starts to recede and the Fed becomes less hawkish in its monetary policy direction. While inflation has remained persistent, upward price pressures should start to recede on the back of easing supply bottlenecks and lower commodity prices.

Meanwhile in China, the policy focus of the government has shifted from that of regulatory tightening to now supporting growth as its economy wanes. In the past year, Beijing had cast a wide regulatory dragnet that impacted a range of sectors including technology, education and e-commerce. A slump in the property sector which is a key component of China’s GDP also dragged down economic growth. 

However, Beijing is now looking to turn on the fiscal taps to prop-up growth with stimulus expected to be frontloaded in the 1H’2022. Top officials in Beijing have consistently emphasised the need for economic stability at several policy meetings last year. With a major congress taking place in 2022, there is also incentive for the Chinese Communist Party (CCP) to prevent any further slippage in growth to shore up its political legitimacy after celebrating its 100th anniversary.


The past 2 years saw robust inflows into various asset classes including bonds and equities as investors ploughed into risk assets to ride the recovery in markets. This extended bull-run was tested several times by inflationary fears as well as supply bottlenecks, but still continued to defy expectations. The S&P 500 pierced new highs last year as investors shrug off these concerns to notch higher gains. 
However sentiment indicators aren’t flashing irrational exuberance yet which typically portends to an imminent market pullback. In fact gauges such as Bank of America’s (BofA) Bull & Bear Indicator has fallen over the year and is sitting at neutral territory from bullish levels before. 

With more favourable technicals and markets not reaching its bullish peak yet, we could see more upside for risk assets. Though, that doesn’t mean the ascent will necessarily be a smooth one with headwinds arising from higher interest rates and tighter liquidity conditions. 
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Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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