Schroders Equity Lens Q3 2022 - your go-to guide to global equity markets
Our latest analysis highlights the charts and data that matter to global equity investors.
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What’s been driving stock prices? Are they currently expensive or cheap? And which regions and sectors are poised to do well next?
These are some of the questions we aim to answer in our quarterly publication – the Schroders Equity Lens, a compilation of key trends in global equities illustrated through thought-provoking charts.
Click here to download your Q3 copy.
Summary
Global equities fell in Q2, extending year-to-date declines. The MSCI World Index returned -16.2% in Q2, taking the YTD fall to -20.5%. The market backdrop remained dominated by concerns over higher inflation, rising interest rates and the risk of recession, as well as the war in Ukraine.
Many stock market indices have entered a bear market, defined as a fall of 20% or more.
UK equities remain the top performing market this year, as rising commodity prices continue to boost energy company revenues.
Given the increase in earnings, UK valuations look cheap relative to their own history and their regional peers on a forward P/E basis.
Japanese shares look attractive on several valuation metrics. At the same time, the yen has been weak which typically benefits Japan’s exporters. This could lead investors to reconsider their view of Japanese stocks.
Sustainable investing came under fire this quarter. Our research shows that more sustainable companies generally command higher valuations than their less sustainable peers. This is more pronounced in some sectors than others.
In recent months, defensive stocks have seen their valuations versus cyclicals re-rate significantly as investors look to trim their exposure to risky, economically-sensitive companies.
Globally, value stocks continue to outperform growth. Much of the rotation reflects the sharp de-rating of expensive tech or consumer companies, whose valuations are sensitive to high interest rates and whose share prices had baked in very high growth expectations.
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