Rising interest rates around the globe have reduced economic activity, directly impacting share market valuations. While fears of a recession loom, Candriam discusses the value proposition of US equities, European equities, and emerging market equities.
The investment management firm shares its views taking into consideration sectors such as — consumer discretionary, energy, financials, real estate, healthcare, industrials, materials, consumer staples, information technology, utilities and communication services.
In the case of US equities, the investment management firm says that recent rate hikes by the US Federal Reserve have been priced in by investors and the market is now entering a seasonally positive period. “The US market rebound of the past few weeks was mainly driven by value stocks that outperformed growth stocks,” writes Candriam in a monthly insights report.
Candriam advises investors to maintain a balanced approach and gives investment inputs on each of the sectors in the US equities market.
Moving on to European equities, the investment management firm says that the recent rebound was driven by value stocks that have outperformed growth stocks. On the earnings side, European firms are slightly negative. While Candriam advises caution, it says the key is ‘strong discipline while picking a stock.
Coming to emerging market equities, Candriam says that volatility continued in October. US restrictions on Chinese companies to access US chip technology led to most of the sell-off after early gains during the month.
“In an environment of continued US dollar strength and fall-out risks from a meaningful slowdown in demand in the US and Europe, we remain cautious on the outlook for emerging market equities,” says Candriam.
Considering the geopolitical risks in the region, the investment management firm maintains a balanced and diversified exposure to sustainable growth names in emerging markets.
Apart from the sector-wise outlook, Candriam also talks about the various EM countries and their particular investment views on them.
View the complete insight here.
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