
2023 has well and truly began. We live in times with massive opportunities.
Interest rates are at levels not seen before in decades. While there are downsides to this, such as rising inflation, there are some positives to be had.
Fixed Deposits
Below is a table of the fixed deposit rates available with various banks in Singapore.
Fixed deposit rates are at all-time highs.
In the current interest rate environment, getting a 3% to 4% risk-free return have never been easier.
10-Year Treasury Rate
The US 10-year Treasury Bond yield, deemed as risk-free rate, reflects the opportunity costs for investment.
As at 6 Jan 2023, the 10-year treasury rate stands at 3.55%. This figure is close to its all time highs.
With that out of the way, let’s explore the 3 narratives going into 2023.
1. China Re-Opening
For the most part of 3 years, China was closed to the world.
No tourists, no expats.. nada.
People were stuck in their homes for more than 1,000 days, unable to travel.
Then, on 8 Jan 2023, China announced the re-opening of their borders. The abandonment of the last remnants of its “zero-covid” policy.
Re-opening the country’s borders is equivalent to opening a can of worms. We’ll begin to see the pent-up demand for travel.
So what does this mean?
With more people from China travelling, it’s likely that inflation will remain.
To curb inflation, interest rates are likely to remain high.
2. Looming Recession
Big tech firms are leading the way for layoffs.
Tech companies have laid off more than 120,000 workers in 2022, with more expected to come in 2023.
One of the biggest names, Amazon, announced that job cuts will exceed 18,000 roles.
This is just one among many big names like Meta, Citigroup, Morgan Stanley, Mircosoft, Johnson & Johnson, and Twitter.
How’re you preparing for it?
3. High Valuation
Yes, markets have fallen badly in 2022. Some individual stocks have seen declines of up to 90%.
In contrast, the S&P500 index has “only” fallen 19.64%.
Despite this, the overall valuation of the market is still high (taking reference from the P/E ratio of the S&P500).
P/E Ratio
If we look at the P/E ratio for the S&P 500, it stands at 20.26.

Given the mean of 15.99 and median of 14.91, a P/E ratio of 20.26 still looks expensive. We may potentially see a downside of between 20% to 30%.
Seasonality Chart
The index typically has a poor first quarter of the year (Jan to Mar), in terms of performance.
If you’re looking to invest, this is the opportune time to do so.