ROBECO - Tue, 10/03/2023 - 18:22

Vigilance required

Welcome to our renewed and expanded Fundamental Equity Quarterly. In addition to our regular outlook articles for developed markets and emerging markets, we present several new sections in this publication: where we differ from the market, Japan trip notes, sustainability highlights, a ‘stunning statistic’, and an interview with one of our lead portfolio managers.

  • DM outlook still clouded by macroeconomic fears
  • Japan corporate restructuring is only just getting going
  • EM likely to benefit from monetary policy easing

Joshua Crabb, Head of Asia-Pacific Equities, opens the series. He talks about his market views and how Robeco’s Asian Equity strategies have developed. We hear an on-the-ground report from Japan, find out why Robeco’s global team thinks some defensive sectors might be value traps in this cycle, and get a review of 2023’s AGM season from our engagement team.

Going into Q4, many investors will feel like rock band Green Day’s platinum hit record ‘Wake Me Up When September Ends’. The S&P 500 and MSCI World indices were down well over 4% in September and sentiment was rather downbeat. Usually, after a weak September we can expect a strong Q4.

However, the foreground is not particularly bullish in our view, although the macro environment is very hard to call at the moment. Even the New York Fed and the Atlanta Fed are almost three percentage points apart in their GDP forecast. Most recession indicators are on red, the looming US debt crisis weighs on sentiment, and the two next biggest global markets, China and Europe, are affected by shrinking global trade and below-trend growth. By way of contrast, two bright spots stand out: two-thirds of companies beat earnings estimates and there is currently more than USD 5 trillion parked on the sidelines in US Treasuries. On balance, we have become more cautious in our developed markets strategies and, although keeping our foot on the gas, have shifted down a gear.

We hope you download and enjoy reading this Quarterly Outlook and welcome your feedback.

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