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In the Interim of Time: Looking Ahead to 2022




We have officially entered the third year of the pandemic, and we have now started regulating our lives accordingly. In the last year, with vaccines being circulated, we all became excited at the prospect of going back to what we knew to be reality. However, variant Delta knocked on our doors, with Omicron following not so long after, and both postposed our social recovery from the pandemic. Nonetheless, we cannot say that the financial market has not flourished compared to the global lockdown of 2020, with a few markets hitting new records.


We can bravely say that 2021 was the year of inflation during which the prices increased globally due to mainly the supply chain crisis amongst other issues. Manufacturers, especially those active in consumer goods, had to increase the price of their goods and services, in order to be able to financially recover from the great blow of the pandemic. Hence, by mid-year, it was clear enough that high inflation was upon us, with the Eurozone growing fast after the second quarter of 2021. Few economists argued that inflation would be a temporary situation, but now, having officially entered 2022, inflation remains on high levels with the fuel prices affecting shipping costs, thus having an impact on the wholesale prices, with some countries like the US recording an outstanding increase of 6.8%.


On the other hand, even if the money we spent bought us less products, it has, probably, been the biggest financial recovery for stock and financial markets since the financial crisis of 2008 and its Great Recession – during which, even then, inflation remained on low levels. Markets had an outstanding performance as, according to Forbes, S&P 500 gained 26,9% in 2021, a record only reached in 1995. Moreover, Nasdaq and Dow Jones Industrial Average went up to 21.4% and 18.7% accordingly, both of which marked a new high record in the market.


In addition, on a yearly review, the technology industry had a field day as it has been the one with the highest demand  – a well-expected event as there has been an increase in the demand for work-from-home adjustments, teleconferences, and online shopping. Companies saw the opportunity of Initial Public Offering (IPOs) and took advantage of it by selling their shares – an action that turned to be successive with IPOs being twice as much compared to 2020. In fact, nineteen companies raised 1 billion dollars in 2021, and, in total, a record of more than 1 trillion dollars were raised through IPOs and direct listings. Similarly, almost every financial sector rose from the ashes and outperformed 2020. Healthcare came in second with the high rates of the vaccine being on the front line, hoping in escaping the highest risk of infection. Moreover, Real Estate pricing saw an increase with a record of 19,7% due to the low interest rates banks had established in order to stimulate their economy. This provided many with the opportunity to invest in real estate, as, once again, the lockdown gave a whole new meaning to private space and what it means to feel like home.


All in all, even if 2021 treated the financial market fairly well, investors and managements should never rely on the past for what is there to come. We have seen a lot of people characterizing 2021 as a bull market, similar to the economic recovery of 2010. However, even if that will be the case, we should not forget that this time we still have to deal not only with an economic crisis, but a health crisis – one that has cost us a lot, from every perspective. We can argue that our path to recovery has begun, and as it was seen in 2021, recovery can bring more profit than an already established and well-paid-off field. Undervalued companies made their presence known which provided the market with a new perspective and more opportunities to investors. However, let us traverse 2022 not only with the wish of a fast recovery from the pandemic, but, also, with the wish of humanity to remember – and appreciate - what it feels like to have the privilege of living spontaneously and with no restrictions.  

 

January 19th 2022

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