• Quarterly outlook

Equity outlook: Guarded optimism

We look back on a remarkably strong year for global equity markets, which despite a hesitant start delivered close to 20% returns by mid-December. Our Global Stars, Emerging Markets and Asian equity strategies have been performing successfully, all well above benchmark and high up in their peer group rankings1.

Download the publication


Authors

    Global Head of Fundamental Equity
    Portfolio Manager
    Head of Emerging Markets team

Top keywords

Summary

  1. DM equity rally should broaden as the Fed pivots
  2. Earnings cycle set to drive EM equities
  3. Productivity growth and the energy transition are long term tailwinds

Macro developments and policy moves caused serious mood swings amongst investors in 2023. Worries about higher for longer inflation leading to a recession were traded for optimism about a soft landing towards the end of the year. We see Federal Reserve chairman Powell’s guidance that several rate cuts are on the cards for 2024 as a positive, as long as this is for the right reason. Namely that inflation is becoming under control, and not because the Fed knows something that the market doesn’t. We follow closely how the effect of higher interest rates is starting to come through in the real economy. Credit card delinquencies are rising rapidly in the US, the number of bankruptcies is creeping up, also in Europe, and few companies surprise positively on revenue growth. Data from the trucking sector, usually a good leading indicator of future economic activity in the US, also shows signs of weakness. This calls for caution, and we select stocks accordingly. 

At the same time, long term investors are seeing that tech advances are accelerating and increasingly driving productivity growth. We are now hitting the steeper part of the technology curve. The pace of change through the internet economy years of 1995 to 2020 may look sedate by comparison with the advances we are about to see in the next decade. In addition, the recent COP 28 in Dubai showed that the energy transition is still a powerful driver and will bring tremendous investment opportunities. These trends are reflected in our portfolios as well. 

Furthermore, we pound the table for emerging markets. In this Quarterly we discuss how we see many emerging markets benefiting from macroeconomic strength compared to the developed world, and from a strong position in key growth industries. Robeco’s emerging markets strategies offer multiple ways to initiate or calibrate exposure to benefit from a long-term rebalancing towards the world’s fastest growing economies.   

Thanks for reading, enjoy the end-of-year celebrations, and we look forward to catching up with you in 2024! 

Download the full publication!

Footnote

1 Source: Morningstar, Robeco Performance Management

Download the publication

Get the latest insights

Subscribe to our newsletter for investment updates and expert analysis.

Don’t miss out
Related topics
share

Latest articles

Let's keep the conversation going

Keep track of fast-moving events in sustainable and quantitative investing, trends and credits with our newsletters.

Don’t miss out

Robeco aims to enable its clients to achieve their financial and sustainability goals by providing superior investment returns and solutions.

Important information
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor.


Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States. This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.