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.
In the Atlas Capital quantitative assessment of equity regions as of February 2023, international stocks are favored over the US. We are particularly tilted toward Europe and Japan. Atlas is tilted away from the US stock market because both valuation and momentum are negative relative to non-US markets.
US Sector Ranking
Atlas is underweight or at neutral weight for most US sectors, because of unfavorable valuations. The four most highly weighted US markets are:
These four US equity markets have the lowest ranking and therefore underweight positions for clients:
- Consumer Discretionary
- Communication Services
- Real Estate
Asia/Pacific Country Ranking
In Asia/Pacific we are tilted toward Japan and Korea while being neutral in Australia and tilting away from Hong Kong and Singapore.
European Country Ranking
The four countries with the highest overall ranking in Europe are:
The least favored European equity markets are Belgium, Finland, Sweden and Switzerland.
Emerging Market Country Ranking
The Emerging Market region has a wide dispersion of favorability. The four best-positioned Emerging Markets are:
Clients have neutral positions in China and the Philippines and are underweight the countries in red, including Indonesia, India, Thailand, Malaysia and Frontier Markets. Russia is not investable at this point and is not shown on the chart.