As the year begins investors are feeling optimistic about the possibility of a return to bull market territory, however, mixed economic data has left some wary of what is to come. This contradictory outlook has left retail investors with a difficult question of whether to invest in stocks whilst they are still low, or wait out the possibility of another bear market rally.

Axelle Pinon, a member of the investment committee at fund manager Carmignac, has suggested that the coming earnings season will be pivotal for the trajectory of the market. Pinon says that the forward-looking commentary of companies will be what matters, with the expectation that many companies’ earnings will weaken in 2023 due to tighter financial conditions, higher input costs, and lower demand.

With this in mind, experts suggest looking beyond traditional markets such as the US and the UK to find investment opportunities. Luca Paolini, chief strategist at Pictet Asset Management, recommends that investors look to Asia, particularly China, as it offers investors respite from weak growth and tighter monetary conditions in the West. Paolini is starting 2023 with a “tilt” towards Asian and emerging market equities, particularly China, “amid signs that Beijing is seeking to normalise its pandemic policies”.

Andrew Bell, CEO of the Witan Investment Trust, also favours China as he believes it will be the only major economy to accelerate in 2023, mitigating the weaknesses elsewhere. This should drive global growth, but with a potential downside. “China’s appetite for commodities may slow the decline in inflation over 2023, prolonging the peak in interest rates,” Bell says.

The road ahead may be volatile, with central banks potentially making serious policy mistakes by tightening too fast, draining the market of liquidity. However, experts believe that the worst is behind us and whilst investors must be patient, the recovery is coming.