Market and Investment Outlook 2024 Q3
An update by our Lead Portfolio Managers
As the year marches into its final quarter, the economic landscapes of Canada, the U.S., and China narrate tales of cautious optimism juxtaposed against latent uncertainties. The summer’s robust fiscal health, underscored by manageable inflation, stellar job markets, and buoyant corporate earnings, now contends with historical patterns suggesting that a recession may cloak itself beneath the veneer of optimism.
In Canada and the U.S., the impact of significant rate hikes is projected to permeate the respective economies with a delayed effect, revealing its full manifestation possibly by late 2023 or 2024. The specter of a hard landing looms, as additional rate hikes might exacerbate the “higher for longer” scenario, casting shadows on the premature declarations of a soft economic landing.
In contrast, China’s economic pathway leans towards measured and sustainable growth, even amidst present challenges. As governmental restrictions potentially subside and the economy steers through the current turmoil, a rebound seems plausible, signposting a future where capital finds its way back into the Chinese market.
A disciplined investment strategy, spotlighting reasonably valued high-quality stocks, surfaces as a beacon through these economic convolutions. Amidst this, our Canadian small-cap strategy and model portfolio for China project a promising picture, leveraging intrinsic value discounts and potential capital returns respectively, pointing towards prospective growth and resilience in the face of uncertainties.
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