In our view, category leadership throughout the downturn, and investment opportunities within the ensuing recovery will be predicated on how long the widespread shutdowns remain in place.
Impacts to the real economy from reductions in capex and employment were manageable from 2014-2016 and likely remain so. Additionally, banks remain modestly exposed to Energy loans, and most lending to the sector remains in the form of corporate debt.
While we do not make formal earnings growth forecasts, we believe the current impact on earnings growth due to the coronavirus outbreak will likely be relatively short-lived.
As of 25 March 2020, our global equity sector views have remained largely unchanged. However, we are assessing various possibilities in analyzing how this recent downturn might take its course and have narrowed it to three likely future scenarios.
Low carbon strategies are growing in demand, demonstrating the growing opportunities that exist. For investors that are facing the possibility to divest from carbon, we highlight how to construct a carbon divestment strategy and the ways we integrate low-carbon themes into our process.
As the market cycle continues to mature, we expect the yield curve to remain relatively flat and the economy to shift from investment-driven growth to consumption driven growth. As such, capital intensive sectors will likely lag while service-oriented, consumption-driven sectors will likely lead, driving outperformance for Big Growth equities.
Following a multi-year stretch of almost uninterrupted outperformance, some investors question whether the Information Technology sector is in a position similar to the late 1990s Tech Bubble, pointing to lofty valuations as evidence. However, in our view, not only are valuations an invalid indicator of a second Tech bubble, but they also ignore essential context.
A number of business-friendly reforms against an improving economic backdrop have likely contributed to Brazilian equities surpassing their Emerging Markets (EM) peers this year. With additional beneficial measures planned and pervasive skepticism about their chances of passage, we think more positive surprise may await and remain optimistic of Brazil’s prospects. In our view, Brazil’s experience underscores how economic reforms can lift equities, particularly in the many EM countries where positive reform is badly needed.
In our view, the Big Growth and Small Value performance cycle is linked to the business cycle and yield curve. We also believe the flattening yield curve and cyclical shift from investment–driven growth to consumption-driven growth points to Big Growth outperformance moving forward.
Highlights macro trends and the popularity of various ESG investing approach.
China’s economic miracle—its 30-plus year path of rapid advance and development to become the world’s second-largest economy—is often seen as uniquely Chinese, an isolated case of policymakers luckily pulling all the right levers to conjure growth. To us, though, a longer perspective shows China’s miracle bears broad similarities to Taiwan’s, Korea’s and Japan’s (with some admittedly Chinese characteristics). We believe a look at how China’s “miracle” resembles those before it—and at some key differences—can add valuable perspective on its present situation and the likely path forward.
Fisher Investments Europe was established in London, England in 2000. Fisher Investments Europe offers the portfolio management services of its parent company, Fisher Investments, an independent money management firm in the US founded in 1979 by investment guru Ken Fisher. Today, Fisher Investments and its affiliates oversee more than £87 billion* in assets for over 68,000 private clients and 150 institutional clients globally.* Founder Ken Fisher’s “Portfolio Strategy” column for Forbes ran from 1984 through 2016, making him the longest continually running columnist in the magazine’s 90+ year history. He has also authored several New York Times bestsellers on finance and investing. (*As of 30/04/2020)