The reporting season for the first quarter of 2022 is drawing near. It traditionally starts with US banks. In the banking sector, we are relatively cautious with respect to the investment banks, as IPO activity flattened in the past quarter due to stock market uncertainty. On the other hand, we are more constructive for regional banks, which are expected to benefit from further interest rate hikes.
The financial impact of ongoing supply chain problems, rising energy prices, high wage inflation and overall inflation as well as declining economic growth have the full attention of investors in this year's reporting season. It remains to be seen whether companies feel comfortable enough in this uncertain environment to provide guidance for 2022 as a whole. Given the various uncertainties, it is likely to be challenging to meet earnings growth expectations of 13% (YoY) in the MSCI World (see chart below). Companies with considerable free cash flows, however, have a good chance of exceeding analysts' expectations. This is also where our research and investment focus lies.