2024 | Quarterly Outlook | Fundamental Equity

Equity outlook: Strength through breadth

The market’s dovish expectations have finally been met as the US Federal Reserve duly played catch-up with the bond market with its first rate cut of a new easing cycle.

The positive development we have seen in the past quarter is that the market breadth in the US and globally has increased with a rotation out of big tech and AI-related companies into sectors like healthcare and consumer staples which were somewhat neglected in the first half of the year.

This rotation has also impacted emerging markets with South Korea and Taiwan seeing some weakness while investors have increased flows into markets such as Thailand and Indonesia. It’s here where the launch of the Fed’s rate cutting cycle will have profound implications, giving emerging market policy makers more room for manoeuvre and making dollar-denominated assets less attractive.

I have been contrarian on China from the beginning of the year and positioned for a modest recovery of the market. I expect the stimulus package, which was announced at the end of September, to have a positive effect on the real estate sector, consumer confidence and also on the equity market.

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