Articles & Interviews
11 December 2023
Where Can Value Still Be Found?
Despite the current contraction in manufacturing, the DAX index is reaching new highs in a very complacent environment for Equities.
While the bond market is pricing in the disinflation led by the current economic slowdown, ‘bad news is good news’ rules again in Equity markets as the perspective of more dovish central banks reassures investors.
The complacency across Equity markets is not totally mirrored in credit markets, where in Europe the iTraxx Crossover still trades more than 150bps wider than pre-covid. Current credit spreads offer in our view compelling risk-adjusted return opportunities for risk-on exposures.
Within Equities, Emerging Markets still stand out from a Value perspective (with European SMID caps), and the current resurgence in our strategies of Chinese Tech names illustrates the contrarian opportunities finally reached in the space after the major repricing of the last years. After years of a fruitful very significant underweight in China, our strategies are finally identifying strong Value in some names in the country (while still very underweight Chinese financials). At a time most seem to capitulate on the country, once again we see the benefit of diversification and a pure bottom-up process on a diversified EM exposure.
Partner, CIO & Head of Systematic Equities
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