All Ordinaries Index (ASX: XAO) shares have struggled this year.
Battered by soaring inflation, fast-rising interest rates, and the global consequences of Russia's invasion of Ukraine, the All Ords is down 6.8% in 2022.
But 2023 may bring a big turnaround for ASX shares and stock markets the world over.
That's according to the consensus views of 134 fund managers, responding to a Bloomberg News survey.
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Why could ASX shares enjoy a much stronger 2023?
Bloomberg's survey included some of the biggest names in the investment world, like BlackRock and Goldman Sachs.
Conducted earlier this month, the survey revealed that some of the top investors are forecasting "low double-digit gain" in 2023. Overall, a 10% gain is predicted for global stocks next year, which could see ASX shares potentially join or exceed that rally.
Many of the fund managers were optimistic that we've seen peak inflation, indicating a more dovish US Fed in 2023. All told 71% of the surveyed fundies said they expect share markets to gain next year with 19% expecting them to fall.
Bloomberg noted that in a similar survey last year, the fundies accurately forecast that the biggest risk for share markets in 2022, as witnessed with ASX shares this year, was aggressive interest rate hikes by central banks.
The fundies broadly had a preference for stocks that could maintain their earnings, even in the event of a recession. They also expect stock markets to perform better in the second half of 2023 than in the first half.
The biggest threat in 2023 for global stock markets and ASX shares was said to be "stubbornly high inflation", cited by 48% of respondents.
The big opportunities next year come from a potential ceasefire in Ukraine and with China's reopening.
According to Fabiana Fedeli, chief investment officer at M&G:
The outlook from here onward will be influenced by the probability, depth and longevity of recession. There are still pockets of opportunity where companies with strong fundamentals that are able to weather the storm get sold off in times of market panic.
Pia Haak, chief investment officer at Swedbank Robur, pointed out that much of the recession fears have already been priced into the market.
"Even though we might face a recession and falling profits, we have already discounted part of it in 2022," Haak said. "We will have better visibility coming into 2023 and this will hopefully help markets."
