Chautauqua Capital Management’s Post

When discussing the top-performing financial markets globally in 2024, we observe that both developed and emerging markets have displayed notable returns. These returns are typically measured using broad market indices. To better understand market patterns and enhance diversification and sustainability, cross-border portfolio allocations are essential. Below is a list of the world’s top-performing indices, showcasing their impressive returns. 1- S&P 500 (USA): Up more than 10% in Q1 2024, largely driven by tech stocks like Nvidia and Meta(Northern Trust)(Morgan Stanley). 2- Taiwan (TAIEX Index): Emerging as a leader in 2024 with a 12% return(Northern Trust). 3- India (Nifty 50): Recorded 6% growth in early 2024, continuing its strong performance from 2023(Northern Trust). 4- MSCI EAFE (Developed Markets ex-U.S.): Showed a 9.6% return adjusted for local currencies(Northern Trust). 5- Japan (Nikkei 225): Japanese equities have had a strong year, benefiting from domestic economic conditions(Morgan Stanley). 6- Nasdaq Composite (USA): U.S. tech-heavy index performing alongside the S&P 500 with strong gains due to major tech stocks(Northern Trust)(Morgan Stanley). 7- Germany (DAX Index): Germany’s DAX has performed well in the developed market space, benefiting from a stronger European economy(Morgan Stanley). 8- Mexico (IPC Index): One of the best-performing Latin American markets due to economic reforms and industrial growth(Morgan Stanley). 9- United Kingdom (FTSE 100): With financial and energy stocks rising, the FTSE 100 has seen positive growth in 2024(BlackRock). 10- South Korea (KOSPI Index): Boosted by tech and industrial exports, South Korea’s stock market is a strong performer in Asia(Morgan Stanley). These markets are experiencing growth thanks to positive economic indicators, local currency adjustments, and sector-specific strengths.

Global equity markets continued to appreciate during the second quarter, fueled by artificial intelligence (AI). It has supercharged the performance of U.S. stocks due to heavy representation in the U.S. index. In their Q2 outlook, the team at Chautauqua Capital Management notes that global economic growth looks to be steadying, following several years of negative shocks and despite the current environment of elevated interest rates and heightened geopolitical tensions. Read their full outlook. https://bit.ly/3Y6XIE7

Rethinking global investing. I am happy to share insights on global investments from the 2023 Morningstar Investment Conference. Putting an effective asset allocation strategy into place has become more complicated as equities lose their dominance, and the era of access to easy capital may be a thing of the past. Disruptions in stock markets pose challenges, while higher starting rates in fixed-income assets are evolving the role of bonds beyond their traditional uncorrelated relationship to equities. It has become important to ensure robust portfolios in the face of global issues to guarantee actual returns during a time of rising inflation, recession, and a fast-paced cycle of raising interest rates. Goldman Sachs predicts a soft landing for the US with higher credit quality despite a historical default cycle. US Tech, particularly Artificial Intelligence (AI), dominated 2023, which resulted in exorbitant values. The report suggests exploring opportunities in emerging markets like the UK, Japan, and India instead. Global equities and fixed-income managers are cautiously optimistic despite the many uncertainties, stressing the need to have an appropriate investment plan to avoid increased risk in order to navigate the current turbulent market. Read the full report and stay informed. https://rpb.li/NKqlCR #FinancialReport #GlobalInvestment #StockMarket #Bonds #Equities #RisingInteretRates #EmergingMarket #Global Equities #InvestmentPlan

Goldman Sachs partner Stefan Bollinger 💙💛 in Davos World Economic Forum sharing house view, especially on continued caution over inflation and central bank policy, which would in turn impact returns in both equity and credit markets as spreads fluctuate Follow for the latest insights in private credit and alternative investment #privatecredit #privateequity #goldmansachs #investmentbanking #assetmanagement

From The Roundup: Top Takeaways from Oaktree’s Quarterly Letters - March 2024 Edition The current market narrative about the “uninvestability” of China reminds us of a recent comment from our co-chairman Howard Marks: “If you have two piles of assets – one with things that everyone loves, that are priced well and performing well, and the other with assets that everyone dislikes, that have poor price performance and are believed to be troubled – you have to ask yourself where will you find the best opportunities?” The answer is clearly in the latter. Chinese equities may be at the top of the “disliked and troubled” pile today. They are currently trading at a record-low 8.2x forward estimated earnings, on average,14 and the gap between U.S. and Chinese technology stocks is the widest it has been in many years.15 (See Figure 5.) Moreover, sentiment regarding investment in China is as bad as we’ve ever seen it, with global positioning surveys showing China to be a large consensus underweight. Counterintuitively, many investors who favored Chinese equities a few years ago when large Chinese companies were often being very aggressive in their use of capital, now consider the same equities to be too risky, even though the companies involved have become much more conservative and the equities themselves have become much less expensive. Importantly, we think many high-quality Chinese companies are being punished not because of concerns about their fundamentals, but because of broad macro concerns about China. In fact, the fundamentals of many companies are actually improving. For example, net cash positions at the top 15 Chinese companies in the MSCI Emerging Markets Index have risen from negative $19 billion in 2019 to $113 billion in 2023.16 Far from worsening the investment outlook in China, we believe that this bear market has dramatically improved the long-term investment prospects for those capable of identifying value in a complex market. To paraphrase another quote from Howard, we prefer to buy things when they’re on sale, not after they’ve been marked up.

The global capital market's structure is dynamic and continuously evolving, influenced by several factors, from technological advancements and regulatory changes to economic shocks, geopolitical tensions and shifts in market dynamics comprising diverse investment options. 🔗 https://lnkd.in/dyvRNg-7 #NCM2024Outlook

The investment markets experienced notable trends and shifts in June 2024. The month saw significant movements in equities, bonds, and commodities, influenced by various economic and geopolitical factors. Global equities performed well, with the S&P 500 increasing by 3.6% in June, leading to a 15% rise for the first half of 2024. Large-cap technology stocks primarily drove this growth. Conversely, small-cap stocks, represented by the Russell 2000 index, fell by 1.0% in June and have only seen a modest 1.7% increase year-to-date. Internationally, the MSCI ACWI ex-US index remained stable, while emerging market stocks surged by 4.3% in June and returning 11.0% for the year so far. The performance of sectors varied significantly during the month. Technology stocks, especially those tied to artificial intelligence, outperformed, with global growth stocks leading the charge at a 6.4% quarterly gain. In contrast, rate-sensitive sectors like small-cap stocks and REITs struggled due to the high-interest-rate environment. European equities faced volatility, particularly in France, due to political instability, while Asian markets benefited from supportive measures in China and strong performance in the Taiwanese market. On the local front, South African assets rallied due to a perceived positive outcome of the election. South African listed property lead the charge, returning 6.0% for the month. This was followed by the South African All Bond index and the JSE, which returned 5.2% and 4.1% during June 2024. Market sentiment remained mixed. Positive momentum was observed in tech-heavy indices like the NASDAQ, which gained 17.5% in 2024. However, economic fundamentals continued to present challenges, with high interest rates and low consumer spending weighing on broader economic activity. Valuations remain high, with price-to-earnings ratios near the upper historical range, causing concerns about sustainability without broader market gains. We increased exposure to South African assets during the early part of the month, specifically South African nominal bonds, which rallied hard due to the positive political environment. Subsequently, we took some profits but remain cautiously positioned due to the global economic fundamentals, which are currently surprising on the downside. View our GraySwan SCI Aggressive Fund of Funds Factsheet June 2024 here.

The investment markets experienced notable trends and shifts in June 2024. The month saw significant movements in equities, bonds, and commodities, influenced by various economic and geopolitical factors. Global equities performed well, with the S&P 500 increasing by 3.6% in June, leading to a 15% rise for the first half of 2024. Large-cap technology stocks primarily drove this growth. Conversely, small-cap stocks, represented by the Russell 2000 index, fell by 1.0% in June and have only seen a modest 1.7% increase year-to-date. Internationally, the MSCI ACWI ex-US index remained stable, while emerging market stocks surged by 4.3% in June and returning 11.0% for the year so far. The performance of sectors varied significantly during the month. Technology stocks, especially those tied to artificial intelligence, outperformed, with global growth stocks leading the charge at a 6.4% quarterly gain. In contrast, rate-sensitive sectors like small-cap stocks and REITs struggled due to the high-interest-rate environment. European equities faced volatility, particularly in France, due to political instability, while Asian markets benefited from supportive measures in China and strong performance in the Taiwanese market. On the local front, South African assets rallied due to a perceived positive outcome of the election. South African listed property lead the charge, returning 6.0% for the month. This was followed by the South African All Bond index and the JSE, which returned 5.2% and 4.1% during June 2024. Market sentiment remained mixed. Positive momentum was observed in tech-heavy indices like the NASDAQ, which gained 17.5% in 2024. However, economic fundamentals continued to present challenges, with high interest rates and low consumer spending weighing on broader economic activity. Valuations remain high, with price-to-earnings ratios near the upper historical range, causing concerns about sustainability without broader market gains. We increased exposure to South African assets during the early part of the month, specifically South African nominal bonds, which rallied hard due to the positive political environment. Subsequently, we took some profits but remain cautiously positioned due to the global economic fundamentals, which are currently surprising on the downside. View our GraySwan SCI Moderate Fund of Funds Factsheet June 2024 here.

The investment markets experienced notable trends and shifts in June 2024. The month saw significant movements in equities, bonds, and commodities, influenced by various economic and geopolitical factors. Global equities performed well, with the S&P 500 increasing by 3.6% in June, leading to a 15% rise for the first half of 2024. Large-cap technology stocks primarily drove this growth. Conversely, small-cap stocks, represented by the Russell 2000 index, fell by 1.0% in June and have only seen a modest 1.7% increase year-to-date. Internationally, the MSCI ACWI ex-US index remained stable, while emerging market stocks surged by 4.3% in June and returning 11.0% for the year so far. The performance of sectors varied significantly during the month. Technology stocks, especially those tied to artificial intelligence, outperformed, with global growth stocks leading the charge at a 6.4% quarterly gain. In contrast, rate-sensitive sectors like small-cap stocks and REITs struggled due to the high-interest-rate environment. European equities faced volatility, particularly in France, due to political instability, while Asian markets benefited from supportive measures in China and strong performance in the Taiwanese market. On the local front, South African assets rallied due to a perceived positive outcome of the election. South African listed property lead the charge, returning 6.0% for the month. This was followed by the South African All Bond index and the JSE, which returned 5.2% and 4.1% during June 2024. Market sentiment remained mixed. Positive momentum was observed in tech-heavy indices like the NASDAQ, which gained 17.5% in 2024. However, economic fundamentals continued to present challenges, with high interest rates and low consumer spending weighing on broader economic activity. Valuations remain high, with price-to-earnings ratios near the upper historical range, causing concerns about sustainability without broader market gains. We increased exposure to South African assets during the early part of the month, specifically South African nominal bonds, which rallied hard due to the positive political environment. Subsequently, we took some profits but remain cautiously positioned due to the global economic fundamentals, which are currently surprising on the downside. View our GraySwan SCI Worldwide Flexible Fund Factsheet June 2024 here.

MSCI Mexico in the Eyes of the Financial World in a Nutshell (2/2) 3. The Neutrals (25%) Approximately 25% of the market remains **neutral**, taking a “wait-and-see” approach. These investors acknowledge both the opportunities and the risks: - Cautious Optimism: While they recognize Mexico’s potential as an emerging market, neutral investors are hesitant to make bold moves given the uncertainty in global markets. They are watching closely for signals of more stable macroeconomic conditions before increasing exposure. - Hedging Risks: Many neutral participants are keeping their positions but hedging against currency risks or diversifying with other emerging market ETFs to balance exposure. - Sector-Specific Plays: Some are focused on sector-specific opportunities within the MSCI Mexico index. For example, they might be bullish on consumer staples but cautious on energy, reflecting a more nuanced approach. Summary of Sentiment: - Optimists (40%): Confident in Mexico’s growth prospects, especially with nearshoring trends and undervalued equities. - Pessimists (35%): Concerned about currency risks, political uncertainty, and potential global economic headwinds. - Neutrals (25%): Taking a cautious, measured approach, waiting for clearer market signals. This sentiment breakdown highlights that while optimism is in the majority, there’s still a significant portion of investors taking a more guarded stance on MSCI Mexico ETFs.