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.
January 2022
Regional Assessments
In the Atlas quantitative assessment of equity regions as of January 2022, Canada is most favorably positioned, while international small cap is at the bottom. The overall ranking top to bottom is:
- Canada
- Europe
- Asia/Pacific
- Emerging Markets
- United States
- International Small Cap
January 2022
US Sector Ranking
The Atlas assessment of US sectors favors the following:
- Energy
- Consumer Staples
- Financials
These US equity markets have the lowest ranking:
- Small Cap
- Communication Services
- Consumer Discretionary
January 2022
Asia/Pacific Country Ranking
In the Asia/Pacific region, only Japan has 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.
January 2022
European Country Ranking
As mentioned above, Europe is the most favored large region among global equities. As a consequence, Atlas would tilt towards higher than benchmark weights for half of the European countries. The four countries with the highest overall ranking in Europe are:
- Austria
- Israel
- United Kingdom
- Norway
The least favored European equity markets are Netherlands, Ireland, Denmark and Finland.
January 2022
Emerging Market Country Ranking
As mentioned above, Emerging Markets have a low ranking among global equities, weighed down by difficulties in China, the largest Emerging Market. The four best-positioned Emerging Markets are:
- South Africa
- Mexico
- Brazil
- Taiwan
China has the lowest favorability score of all the equity indices ranked by Atlas. Other Emerging Markets where Atlas is underweight for clients include Russia, Malaysia and Thailand.