switzerlanden
Gradually preparing for a rotation

Gradually preparing for a rotation

17-07-2020 | Insight
In our last quarterly, we expected markets of countries resuming economic activity earlier than others to fare better. These countries included China, Taiwan and South Korea. Since the end of the first quarter, and at the time of writing, the performance of the CSI 300, Kospi and TWSE indices all beat the MSCI World and S&P 500 indices. Now, we add Europe.
  • Fabiana Fedeli
    Fabiana
    Fedeli
    Global Head of Fundamental Equities
  • Wim-Hein  Pals
    Wim-Hein
    Pals
    Head of Emerging Markets team
  • Jan Keuppens
    Jan
    Keuppens
    Senior portfolio manager

Speed read

  • DM outlook upgraded to neutral, EM neutral outlook unchanged
  • We now expect a U-shaped economic recovery
  • We favor countries that have been dealing with Covid-19 more effectively

We also highlighted the importance of being selective from an individual stock viewpoint, as once the earnings impact became clear, we would start being able to distinguish the winners from the losers. We still stand by those statements, and were not surprised by the performance concentration that we saw over the last three months.

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

Expect more of the same, but with less tempo

So, what comes next? More of the same, but with less tempo. A cooldown, if not a pullback, of equity markets is now overdue. The tech-savvy stocks that have driven the upside in both developed and emerging markets may not plummet, but it is difficult to see them continuing to perform at the same pace. The next stage of market upside will have to come from the more cyclical stocks. These, however, need better visibility on an economic pickup than what we have now.

A lot will depend on how Covid-19 continues to spread. Some countries that seemed to be over their contagion peaks are now back to seeing cases rise, with the US being the most glaring example. How these new increases will be managed will have a strong impact on the shape of the global economy. We are clearly not in a V-shaped recovery. For now, we believe we are looking more at a ’U’.

Until the virus is under control, from a regional perspective we continue to favor countries that have been dealing more effectively with the outbreak. This means looking at North Asia and Europe. From a stock selection perspective, and given the extreme valuation differentials, our teams have been taking profit from some of the high-flying compounders and have added to cyclicals and stocks that had seen adverse price action, but still have solid fundamentals.

Subjects related to this article are:
Logo

Disclaimer Robeco Switzerland Ltd.

The information contained on these pages is for marketing purposes and solely intended for Qualified Investors in accordance with the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”) domiciled in Switzerland, Professional Clients in accordance with Annex II of the Markets in Financial Instruments Directive II (“MiFID II”) domiciled in the European Union und European Economic Area with a license to distribute / promote financial instruments in such capacity or herewith requesting respective information on products and services in their capacity as Professional Clients. 

The Funds are domiciled in Luxembourg and The Netherlands. ACOLIN Fund Services AG, postal address: Affolternstrasse 56, 8050 Zürich, acts as the Swiss representative of the Fund(s). UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zurich, postal address: Europastrasse 2, P.O. Box, CH-8152 Opfikon, acts as the Swiss paying agent. The prospectus, the Key Investor Information Documents (KIIDs), the articles of association, the annual and semi-annual reports of the Fund(s) may be obtained, on simple request and free of charge, at the office of the Swiss representative ACOLIN Fund Services AG. The prospectuses are also available via the website www.robeco.ch. Some funds about which information is shown on these pages may fall outside the scope of the Swiss Collective Investment Schemes Act of 26 June 2006 (“CISA”) and therefore do not (need to) have a license from or registration with the Swiss Financial Market Supervisory Authority (FINMA). 

Some funds about which information is shown on this website may not be available in your domicile country. Please check the registration status in your respective domicile country. To view the RobecoSwitzerland Ltd. products that are registered/available in your country, please go to the respective Fund Selector, which can be found on this website and select your country of domicile. 

Neither information nor any opinion expressed on this website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco Switzerland Ltd. product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports. 

By clicking “I agree” you confirm that you/the company you represent falls under one of the above-mentioned categories of addressees and that you have read, understood and accept the terms of use for this website.

I Disagree