Goldman Sachs Group Inc.’s Top Trade Ideas for 2022

Experts from the US investment bank “Goldman Sachs” offered a set of advice to investors about the coming year, and said that the global economy will see strong demand and limited supply in 2022.

According to Bloomberg, the main idea of ​​Goldman Sachs’ recommendations in the 2022 Key Trends report revolves around the markets facing the “low octane” phase of the global recovery.

The bank’s team expects the global economy to witness strong demand and limited supply in 2022, in light of supply chain disruptions this year.

Among the top trade ideas are shorting the Australian dollar versus Canada’s currency. That’s partly on a bullish view on oil and Australia’s exposure to metals prices and downside risks to China’s economy. Australia is also expected to raise interest rates more slowly than Canada.

The Goldman team advises buying U.S. dollar five-year five-year breakevens on a bet inflation will accelerate, and the Federal Reserve’s reluctance to tighten aggressively will see markets demand more compensation for the risk it will quicken even further. 

The strategists also recommend going long on copper and Brent oil contracts for the end of 2023, as those markets are cyclically tight, with the forwards “nowhere near the necessary incentive level for higher activity.”

In stocks, the recommendations include exposure to Mexican and Russian equities in U.S. dollars, as well as going long on Egyptian shares. The Mexican and Russian markets offer attractive valuations and a “relatively insulated macro backdrop,” the strategists wrote. Egypt has a “relatively high gearing to oil prices” compared with its regional peers, they said.

Here are some of Goldman’s other top trade ideas:

  1. Go long an equal-weighted basket of the Swedish krona, Czech koruna and Polish zloty versus the euro
  2. Go long Leveraged Loan index versus High Yield Corporate bond index in the U.S. dollar market
  3. Go long three-year South Africa inflation breakevens