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.

July 2022

Regional Assessments

In the Atlas Capital quantitative assessment of equity regions as of June 2022, Asia Pacific and Europe are the most favorably positioned to outperform. Atlas is underweight the US stock market, due to unfavorable valuation and momentum relative to non-US markets.

July 2022

US Sector Ranking

Atlas is underweight most US sectors for clients, because of stretched valuations. The only sector with positive Value and Momentum at the end of July is Energy. Atlas has a neutral position in the sectors highlighted in yellow on the chart, which include:

  • Materials
  • Mid-cap
  • Health Care
  • Consumer Staples
  • Utilities

These four US equity markets have the lowest ranking:

  • Consumer Discretionary
  • Communication Services
  • Information Technology
  • Small Cap (Russell 2000)

July 2022

Asia/Pacific Country Ranking

In the Asia/Pacific region, Japan and Australia have a high enough ranking to merit an overweight in client portfolios. We have neutral or underweight positioning in the other equity markets, which have less favorable Valuation and/or Momentum metrics.

July 2022

European Country Ranking

Because of favorable valuations, Atlas is over benchmark weight for several of the European stock markets. The four countries with the highest overall ranking in Europe are:

  1. Norway
  2. United Kingdom
  3. Israel
  4. Spain

The least favored European equity markets are Netherlands, Ireland, Sweden and Switzerland.

July 2022

Emerging Market Country Ranking

The Emerging Market region had a setback in July, lagging the overall stock market recovery due to weakness in Chinese equities. The four best-positioned Emerging Markets are:

  1. Chile
  2. Brazil
  3. Turkey
  4. Indonesia

Russia is not investable at this point, and we moved from a neutral weight to an underweight in China.

Equity Market Downside Risk Dashboard

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