On January 26, 2023, over 100 finance professionals with a connection to structured products in Luxembourg gathered for the Outlook 2023 conference, organized by the Luxembourg Structured Investment Products Association (LUXSIPA). The conference provided a relaxed and welcoming atmosphere for attendees to gain insight into solutions adapted to the current macroeconomic context. President Fabrice Todeschini opened the conference with a presentation on the accomplishments and future goals of LUXSIPA, followed by insightful discussions from four economists: Arthur Van Slooten from Société Générale CIB, Florian Roger from BNP Paribas CIB, Michael Barclay from Banque de Luxembourg, and Xavier Hannaerts from Spuerkeess Asset Management. The economists provided a comprehensive overview of current macroeconomic trends and inflationary dynamics, giving participants a well-rounded understanding of the economic challenges for 2023.

“2023 will be a scenario of ‘boom’ and ‘gloom’. ‘Boom’ is the scenario for China where the end of the zero Covid policy and a renewed stimulus of the building sector is a real game changer. ‘Gloom’ is the scenario for the US economy that despite its apparent resilience of its labor market is on the road to a (mild) recession we believe.” (Arthur Van Slooten, Strategist Global Allocation at Société Générale CIB).

“In developed countries, our main scenario for 2023 is a (mild) recession because of the tightening in monetary and financial conditions and the energy shock. However, this recession should remain mild as fiscal transfers are narrowing the energy shock and as low corporate refinancing needs will contain the rise in default rates. Inflation will sharply slowdown in H1.” (Florian Roger, Head of CIO Office BNP Paribas CIB).

“We have had four decades of falling interest rates since the start of the 1980s and corporates have benefited greatly from globalization as well during the last two decades. A lot of those tailwinds could now potentially change and become headwinds instead… in the long run.” (Michael Barclay, Senior Investment Adviser at Banque de Luxembourg).

“Investors will have to accept volatility. The most important is that this volatility does not shift into bad volatility. So stay invested in quality thematic through well diversified solutions. The good news is that we recorded an historic repricing on the bonds side which makes that the 60/40 approach attractivity is coming back with above average expected return for the next years.” (Xavier Hannaerts, Head of Investments and Conducting Officer at Spuerkeess Asset Management)

Attendees then received practical advice on portfolio allocation and were introduced to several structured products, such as capital protected products for China, gold mining exposure products, and Credit Linked Note (CLN) products. The event ended with a question and answer session, where attendees could directly engage with the economists and gain further understanding of the topics discussed. Overall, the Outlook 2023 conference was a successful event, providing a platform for industry experts to come together and discuss current challenges and innovative solutions. LUXSIPA would like to extend its gratitude to the speakers for their valuable contributions and the attendees for their active participation.