IN FOCUS6-8 min read
Schroders Equity Lens July 2025: your go-to guide to global equity markets
Investing when the market is at an all-time high, market breadth, and a deep dive on corporate supply/demand (buybacks, IPOs,…)
Lees volledig rapportSchroders Equity Lens July 2025
66 Pagina's
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The July 2025 edition of the Schroders Equity Lens is now available: Schroders Equity Lens
Summary:
- The global rebound has been rapid: the US fell 19% but has recovered that and more with a 25% rally to new all-time high (slide 6)
- Stock market returns have been better if invested at an all-time high compared to other times. Staying invested at such times has been more profitable than selling (slides 7-9 and read more)
- Market breadth – the % of companies outperforming the index – is one indicator of how favourable the environment is for active managers (read more)
- Four of the past five years (2020, 2021, 2023, 2024) have been the worst four of the past 20 but breadth has increased sharply in 2025 (slide 10).
- Is this a regime shift which will drive a resurgence in active management?
- Corporate supply/demand dynamics have shifted in favour of non-US markets. Share buybacks have increased considerably in UK, Japan, Europe, especially UK/Japan. This past tailwind for US equity outperformance may now be a headwind. (slides 11-16)
- EM investors face persistent dilution, especially in China. Substantial net equity issuance means EPS growth lags aggregate earnings growth. Active approaches to investing are essential. Chasing growth could disappoint (slide 15)
- Concerns about the risk of stagflation (high inflation and low growth) are increasing.
- Using data since 1926, we find that equities perform worse during stagflation, but still roughly match inflation, on average (slide 17). They have outperformed cash more often than not in these environments. (read more)
- Sectoral performance has been mixed in stagflation years. Judgement is required as the current situation is not like many past episodes (slides 18-20).
- History + judgement: US/Japan look exposed to stagflation risks, Europe/UK currently more interesting propositions (slide 21).
- Stagflation would likely drive increased variation in performance at the company-level, creating opportunities for active managers to outperform. Balance sheet resilience and pricing power will be important.
Charts of the month:
Lees volledig rapportSchroders Equity Lens July 2025
66 Pagina's
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