2020 vision a good look for international equity

By Grace Ormsby

December 17 2019
Share

International equities are set to improve at the expense of US equities over the next 12 months as markets finally find the floor after a tumultuous 2019, a global investment manager has indicated.

T. Rowe Price recently shared its knowledge and investment to provide a number of predictions for 2020 at its annual global market outlook briefing.

The global investment management organisation indicated that international equity markets have serially lagged US markets over the last 10 years – the result of “a combination of structural factors, currency, widening valuation disparities and cyclical factors”.

It observed a “continuation of underperformance as global economies have slowed and international earnings have been disproportionately affected by the US and China’s trade dispute”.

Despite the circumstances and undervalued currencies, it is T. Rowe Price’s view “that the cyclical conditions for international equities to outperform are present”.

This perspective is based on the belief that “growth and inflation expectations have now bottomed out, and takes into consideration the fact that markets are 18 months into a capital expenditure recession, are eight months into an inventory correction, and have been facing political headwinds from the trade war and Brexit”.

T. Rowe Price’s stance on international equity markets is one held just as firmly by portfolio manager and chief investment officer Justin Thomson, who said he anticipates that the cyclical conditions are now right for outperformance (when compared with US equities).

“We may be on the verge of a shift,” he said, noting how heavily recent political headwinds have been felt internationally.

Some of the structural merits for a pick-up in international markets include rising innovation, better corporate governance models, and better demographics exhibiting across emerging markets.

For Mr Thomson, “there is also the potential for valuation to catch up in international equities”.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

New investment platform Arkus allows Australians to invest in property for just ...

Resources

There is $17.5 billion in lost and unclaimed super across ...

Invest