2021 is a solid year for financial markets, as the economy’s ability to adapt to the pandemic, the launch of vaccines, the passage of additional fiscal stimulus measures, and loose monetary policies all support strong developed market stock and commodity performance.

Increased liquidity and declining vacancy rates pushed REITs to the top, with a return of 39.9% on the FTSE Nareit Index. In this space, the best performers are regional shopping malls, shipping centers and apartments. The REIT was followed by US large-cap stocks and commodities, which rose 28.7% and 27.1%, respectively. The strong performance of US large-cap stocks was mainly due to the unprecedented rise of the S&P 500's largest technology stocks.

The shift to commodities, severe supply chain bottlenecks and soaring energy prices supported the performance. Compared with 2020, US small-cap stocks lag behind large-cap stocks with a return of 14.8%, although still higher than the 20-year average of 11.0%.

It was another strong year for developed market stocks outside the United States, with a return of 11.8%. On the other hand, following the correction of the Chinese stock market in 2H21 and continued lockdown measures across the region, emerging market stocks fell 2.2%. Finally, US fixed income fell by 1.5% because long-term interest rates at the end of the year were higher than those at the beginning of the year.

Looking forward to 2022, as the global epidemic gradually passes, we expect that emerging markets will recover further, and the loose fiscal and monetary policies of developed markets will gradually fade.