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INVESTMENT OUTLOOK FOR 2023 - 5 - Executive summary In our 2023 Investment Outlook, we seek to guide investors at a pivotal moment for the global economy. We live in an age of transformation, with surging inflation and fundamental geopolitical shifts leading to rising demands on governments. A sustainable recovery In the terms of the progressing green transformation, we believe that, as investors, we must continue to focus our resources on sustainable long-term growth. We see opportunities in the shift leading to, for example, green hydrogen, restoring natural capital or building green infrastructure. Investment themes for the long run Our themes have both a sustainable angle – energy transition and environmental sustainability – and a focus on enduring trends. These trends include innovation and disruption via new technology, the appeal of private markets and the emergence of China. While any significant re-rating of China A-shares may be unlikely now, valuations appear attractive and argue for strategic positioning. Opportunities include consumption upgrading and hard-tech development. Macroeconomics and markets These sections highlight that: • The global economy is on the brink of recession as policy rates shoot higher, Europe faces an energy shock, and China struggles with zero-Covid policies and fragile property markets. • The Chinese government has scope to stimulate growth, but in the West, government measures to aid households and companies may undermine central bank inflation-busting. • Equities face a struggle to generate above-average returns, even as the disconnect between still relatively optimistic corporate earnings expectations and economic reality narrows. We are neutral, with deep caution in Europe offset by optimism for US growth stocks. • Within fixed income, eurozone investment-grade credit offers the most attractive opportunity with wide spreads, but generally good corporate fundamentals.

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