Current Market Assessment
Which Equity Markets are Favored?
For equity regions, countries and sectors, we combine information into comprehensive charts to help you understand what parts of the global equity market are better positioned for future returns and which are poorly positioned. The results of our quantitative assessments of global equity choices are illustrated in the charts below.
On all charts, the horizontal axis is Value, measuring the relationship of price to fundamental information such as earnings, sales, and cash flow. Equity markets which are farther to the right have better Value. The vertical dimension on the chart is Momentum, a measurement of the recent price performance for the equity index. The markets which are higher up in the chart have better Momentum. While the Atlas process uses other criteria in addition to Value and Momentum, those two are the most important. The markets in the upper right quadrant on the charts (if any) are most favorably positioned for future returns. We call that quadrant the “Comfort Zone”. Those in the lower left are least favorably positioned, in the “Danger Zone”. The size of the circles in the chart represent the market capitalization of the equity index and the color represents Atlas’ current positioning – green for overweight, yellow for neutral weight and red for underweight.
April 2022
Regional Assessments
In the Atlas quantitative assessment of equity regions as of April 2022, Asia and Europe are favorably positioned, while the US equity market is at the bottom, due to unfavorable valuation relative to non-US markets. The overall ranking top to bottom is:
- Asia/Pacific
- Europe
- Canada
- International Small Cap
- Emerging Markets
- United States
April 2022
US Sector Ranking
Atlas is underweight most US sectors for clients, because of stretched valuations. The Atlas assessment of US sectors favors only the following:
- Energy
- Consumer Staples
These US equity markets have the lowest ranking:
- Communication Services
- Consumer Discretionary
- Small Cap
April 2022
Asia/Pacific Country Ranking
In the Asia/Pacific region, Australia and Japan have a high enough ranking to merit an overweight in client portfolios. We have neutral or underweight positioning in the other equity markets, which are influenced by the slowdown in China.
April 2022
European Country Ranking
Because of favorable valuations, Atlas is over benchmark weight for many European stock markets. The four countries with the highest overall ranking in Europe are:
- Israel
- Norway
- Spain
- United Kingdom
The least favored European equity markets are Netherlands, Ireland, Greece and Sweden.
April 2022
Emerging Market Country Ranking
As mentioned above, the Emerging Market region has a low ranking among global equities, weighed down by difficulties in China, and by the collapse of Russian equities since the invasion of Ukraine. The better markets are those with commodity prices exposure, as inflation and the war drive up commodity prices. The four best-positioned Emerging Markets are:
- Turkey
- Brazil
- Chile
- South Africa
China and Russia have very low favorability scores, and we are underweight the Philippines and Frontier Markets for clients as well.
