Activity report 2022

Market Situation


2022 was marked by a number of events that had a significant impact on financial markets. The reopening of the global economy after the crisis created a strong recovery in demand, which in turn led to a return of inflation. The latter was exacerbated by global supply problems, particularly for products from China.

The outbreak of the conflict in Ukraine led to a major energy crisis linked to Russia's position as the world's second largest producer of crude oil and the main exporter to Europe. Energy and commodity prices have risen to record levels, adding to inflationary pressures.

Governments and central banks were quick to react. While the former ensured that sufficient resources (capital, food, energy) were available, the latter tried to reduce inflation through interest rates.

The majority of central banks in the developed world have consistently and decisively raised interest rates, while signalling their intention to keep rates high for a long time to come. You have to go back more than 40 years to see such a rapid rise in interest rates. In just under 10 months, the US Federal Reserve's key interest rate has risen from 0.25% to 4.5%. Switzerland has exited its negative interest rate regime, which has been in place since 2015. The Swiss National Bank's (SNB) key interest rate rose from –‍0.75% at the beginning of the year to +1% in December.

The expected effects of these rate hikes have not yet fully materialised, due to the time lag between the tightening of monetary conditions and the real economy. In the United States, inflation remains high, although there are initial signs of a slowdown. The picture in Europe is more mixed. Inflation is more persistent there because of the significant impact of energy prices. Interest rate rises have led to an economic slowdown, the extent of which remains uncertain.

Financial market developments

Against this backdrop, financial markets have been hit hard over the course of the year. After decades of bullish performance in most asset classes, the world is now facing a significant market slowdown.

The bond market has fallen dramatically this year as a result of rapid interest rate hikes by central banks. The US Treasury bond index has fallen 12.46%, the biggest drop in 40 years. Credit strategy returns have also been affected by rising interest rates and widening credit spreads.

Also as a result of high interest rates, major equity markets posted negative returns of more than 10% over the year. The modest recovery in equity indices in the last quarter was not enough to offset the losses suffered throughout the year. Growth stocks suffered particularly badly, especially technology companies, which were hit by the rise in real interest rates.

The fall in real estate was more moderate, which can be explained by the characteristics of this market (the revaluation of buildings is still ongoing). It should also be noted that, depending on the region, the indexation of rents to inflation helps to maintain yields.

With regard to the foreign exchange market, the main developments were the strengthening of the USD, driven by the interest rate differential in its favour, and the return of the EUR to parity with the CHF. The depreciation of the JPY as a result of the Bank of Japan's accommodative monetary policy and the weakening of the GBP, which was strongly resisted by investors, were also notable.

As a traditional safe-haven asset, gold has held its value in sharply declining markets, providing a stable and reliable hedge. In Swiss franc terms, however, gold's performance of 0.7% was penalised by the rise in real interest rates.

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