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Investment Outlook: More volatility in the rate hiking phase

High inflation is putting pressure on central banks to tighten their monetary stance, but their policies will remain stimulative for some time to come. Economic growth will slow, but from high levels. A tug-of-war between opposing trends will lead to greater volatility, despite continued good fundamentals. We are maintaining a certain overweight in risk assets but expect more modest returns.

“Last year's strong stock market close was reversed in January, which is a reasonable adjustment of stock market valuation and an adaptation to clearly more restrictive monetary policies. But experience shows that central banks are sensitive to both economic weakness and rising volatility in the capital market. Provided we are correct in believing that inflation will fall back and that relatively positive economic performance and earnings will persist, we still expect rising stock markets,” says Fredrik Öberg, Chief Investment Officer, SEB Private Banking.

This issue of Investment Outlook includes three theme articles. In the first, we analyse what happens when monetary policy is tightened – for example, how are financial markets affected when central banks end quantitative easing and consider quantitative tightening. In our second theme article, we examine the metaverse, Web 3.0 and other concepts that may soon become part of our everyday life. We also review emission rights, which are increasingly in focus as price levels are now beginning to make a difference and lead to concrete action.

Investment Outlook can be read in its entirety or as a two-page summary at seb.se/investmentoutlookreport, where you will also find a web video.

For further information, contact:
Fredrik Öberg, CIO, SEB Private Banking
+46 70 767 6179

Press contact:
Niklas Magnusson, Group Press Officer
+46 70 763 8243

SEB is a leading northern European financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world. We take a long-term perspective and support our customers in good times and bad. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, the bank's operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB's business is reflected in our presence in more than 20 countries worldwide, with around 15,500 employees. At 31 December 2021, the Group's total assets amounted to SEK 3,304bn while its assets under management totalled SEK 2,682bn. Read more about SEB at https://www.sebgroup.com