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.

September 2022

Regional Assessments

In the Atlas Capital quantitative assessment of equity regions as of September 2022, Asia Pacific, Europe and Canada 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. Atlas is at market weights for emerging markets and international small capitalization stocks.

September 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 September is Energy. Atlas has a neutral position in the sectors highlighted in yellow on the chart, which include:

  • Materials
  • Mid-cap
  • Health Care

These four US equity markets have the lowest ranking:

  • Communication Services
  • Real Estate
  • Information Technology
  • Consumer Discretionary

September 2022

Asia/Pacific Country Ranking

In the Asia/Pacific region only Australia has a high enough ranking to merit an overweight in client portfolios. We are neutral Japan and South Korea, while underweight the markets highlighted in red.

September 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. Italy
  3. Israel
  4. Austria

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

September 2022

Emerging Market Country Ranking

The Emerging Market region has a wide dispersion of favorability. The four best-positioned Emerging Markets are:

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

Clients have neutral positions in the countries highlighted in yellow. Russia is not investable at this point and is not shown on the chart.

Equity Market Downside Risk Dashboard

Click here for our latest assessment of the downside risk faced by equity investors.

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