In a remarkable performance, Czech equity funds experienced a robust increase of 18% in the past year, surpassing the anticipated inflation rate of around 11% for 2023. The data from the Partners index of equity funds highlights a particularly noteworthy appreciation of these funds by 5% in December alone.

Bond funds also demonstrated a favorable performance, recording a growth of 2% in December and concluding the year with an overall appreciation of 8.7%. Meanwhile, mixed funds, responding to the growth in both equities and bonds, exhibited a 3.2% increase at the year’s end, culminating in a total growth of 11% for the year.

Martin Mašát, an economist at the financial group Partners, attributes the positive sentiment in the financial markets to a crescendo toward Christmas, influenced by the various measures implemented by central banks worldwide.

The American Federal Reserve (FED) played a pivotal role, with doves taking precedence after a prolonged period. A similar resonance occurred during the meeting of the European Central Bank, and the Czech National Bank contributed by initiating the first lowering of the base rate.

Looking ahead to 2024, American central bankers anticipate multiple reductions in base interest rates. This sentiment is mirrored after the European Central Bank meeting, indicating less apprehension about inflation and high-interest rates. The positive impact of these developments on the prices of all financial assets toward the year-end is evident in the robust performance shown by both equity and bond funds.

This successful performance underscores the resilience and adaptability of the financial markets in responding to global economic conditions and policy shifts, providing investors with positive returns in a dynamic landscape.

Article by Prague Forum