Covid variants, liquidity crunch: Key risks for global equities in 2022

Policy makers in Asia, according to Morgan Stanley, will be able to normalise policy gradually, contingent on the pace of recovery, inflation dynamics, and the implications of the Omicron variant

After a stellar run in 2021 that saw the S&P BSE Sensex and the Nifty50 clock gains of 20 per cent and 22 per cent respectively, global equity markets, including India, are gearing up to welcome 2022 on a cautious note.

For one, new variants of the Covid -19 infection that make current vaccines less effective is one of the key risks worth flagging, analysts said. Inflation was also a risk for this asset class in 2021, although most market participants expect that the current elevated inflation levels will be transitory. However, stickier-than-expected inflation could lead to tighter monetary conditions