CIO Strategy BulletinArticle31 Mar 2024

Answers to Your Top Questions: What’s Next for Global Equities? And What About Tech?

CIO Strategy Bulletin

Plenty of tech stocks have lagged high-flying mega caps since the start of 2023.

Key takeaways from this week's bulletin

  • More than 75% of global equity markets are trading above their 200-day moving average. Broadening of equity performance is occurring beyond the US. Global inflation is falling, and central banks are poised to dial back tight monetary policy. This will mean a stronger world economy in 2025. Forward-looking equity investors should consider that returns may be earned more broadly across the world in such an environment.
  • It is not too late to consider tech. In fact, technology should remain a cornerstone of suitable investor portfolios. Plenty of tech stocks have lagged high-flying mega caps since the start of 2023. For long term investors, we see virtue in semiconductor manufacturers, robotics and select software players.
  • The combination of lower policy interest rates, slowing inflation, uninterrupted economic growth and rising corporate profits is as close to an ideal setting for financial markets. As this data and policy became clear, global equity markets rallied without a setback for the past five months. Looking forward, they may still benefit from the mere confirmation of this forecast path but will likely appreciate at a slower pace unless there are further positive surprises.

Potential Portfolio Implications

Our focus is to identify growth opportunities and associated risks across the world. We ask investors to consider a global view, keeping in mind the value of diversification. US shares cannot outgrow the rest of the world by a much larger margin than in the past.

Separately, we still believe tech should remain a cornerstone of portfolios for suitable investors. In a global economy increasingly propelled by technological innovation, we believe investors should seek exposure to technology in their portfolios. In particular, Artificial Intelligence (AI) linked thematic plays in the semiconductor space, robotics, and select software plays are timely.

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