4 Trends to watch out for in H2 2022

The first six months of 2022 have seen the market close with a drop of more than 20 percent. A heady mix of inflation worries and growth stagnation/deceleration has pushed central banks’ interest rate hikes worldwide.

What will the next half of the year respond to?

Interest rate awaits

The Russia-Ukraine war is the main culprit behind all-time high inflation rates. It has tattered the equity market.

The recent market correction has been a hot topic of conversation among startup founders and investors. While some see it as a cause for concern, others view it as an opportunity to buy up promising companies at a discount. For a lot of Series A and seed startups, the downturn may have a little immediate impact. These companies are often shielded from the volatility of the public markets by their private status. However, they may feel the effects indirectly as funding from growth-stage investors dries up. Investors who are looking to cash out may also be more reluctant to put money into these early-stage companies. As a result, Series A and seed startups may have a more difficult time raising capital in the short term.

Internationally or in the US, rates were increased by 75-100 basis points after a long time. The projection is that interest rates will keep rising till the end of this year, and the trend will be carried forward to next year, too!

While there are promises of controlling inflation, much action is awaited. In addition, there is so much to balance for the Central Banks – between inflation, economic growth and fiscal deficit – that it will be a bumpy road ahead for the economists world over.

Recession’s obsession

The proof of the pudding lies in the eating. The evidence of recession lies in equities. Even when authorities in the US are trying hard to control it, the scare remains as it will ripple across international financial markets. The peak will be visible in the coming months and will lead to the end of 2023.

Foreign institutional investor (FII) outflows or blows?

The year 2022 has seen a pull out of billions of dollars from the emerging markets, leaving their equity markets in a mess.

Yearnings for Corporate earnings

Emphasis on increasing profits will remain on corporates even when the results have been dismal. The worst hit this year has been sectors like metals and fast-moving consumer products.

It is only when margins bounce back to wholesome levels will confidence levels grow.

Mergers and acquisitions will also face hurdles. While portfolios are being optimized, dealmakers want to keep their capital to themselves to acquire further capabilities and to alter their core area of business.

The current scenario asks for speed and stability to navigate through tough waters.

This post was written by one of the leading investment banking professionals at KGFin Advisors. A team of seasoned experts and specialists keep a close eye on the industry trends, economic events and a host of leading topics. You can contact John at john@kgfinadvisors.com to set up a FREE consultation.

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