Market and Investment Outlook 2024 Q3
An update by our Lead Portfolio Managers
The onset of 2024 ushers in a cautiously optimistic yet complex market outlook. In the face of moderating inflation and potential rate cuts by central banks, the landscape presents a blend of opportunities and challenges.
Globally, the economic environment is marked by a mix of positive indicators and prevailing uncertainties. Modestly declining inflation and the likelihood of reduced interest rates offer some solace. However, the full brunt of previously high interest rates on the economy and consumer spending remains to be seen. This ambiguity underpins our cautious stance towards the potential rebound in corporate profits and sustained market momentum, especially considering the high valuation multiples in current markets.
Historically, small caps have exhibited robust performance in scenarios similar to the present economic conditions, characterized by moderating inflation and the onset of rate cuts by central banks. This makes the current phase an opportune time for small-cap investments.
In the U.S. and Canada, the Federal Reserve and the Bank of Canada’s strategies could either stabilize or mildly recess the economy, impacting equities. With 2024 being an election year in the U.S., we anticipate some volatility but also recognize the historical trend of positive equity returns during such periods.
In Asia, particularly China, we are vigilant about the rapid advancement towards technological independence and its implications on neighboring economies and global supply chains. Despite the challenges, we see significant investment opportunities, especially as China navigates through its structural transformations.
We put our passion and expertise at your service.