June 2024

Equity and Fixed Income Strategy

Still Overweight Equities, Emerging Markets Increasingly Attractive

Stéphane Rochon, CFA, Equity Strategist; Richard Belley, CFA, Fixed Income Analyst; Russ Visch, CMT, Technical Analyst; Eric Yoo, Associate; Ernad Sijercic, Associate

With investors still focused on inflation trends - which have admittedly been running a little hotter than expected in the U.S. - some may have missed the global uptrend occurring in stocks. Artificial Intelligence plays continue to move higher - which primarily benefits the U.S. market - and are gathering a disproportionate amount of airtime. And yet, the rally is truly a global phenomenon with major markets such as Germany, France, the U.K, Switzerland, Japan, and South Korea all making 52-week new highs (or all-time highs as well), despite sluggish economic growth. The net result is a fresh 52-week high in the MSCI World Ex-U.S. Index. Emerging markets are no slouch either. The MSCI Emerging Markets Index just broke out of a massive multi-year base pattern (thanks in large part to the recent bullish turnaround in Chinese stocks). As noted in previous missives, the rally is also broadening out on a sectoral level. Along with Energy and Miners, even traditionally very defensive Utilities are getting in on the action, partially because of the increasing power demand from data centers and electric vehicles, along with manufacturers moving their production back to North America. For example, clean power generation names such as Northland Power or Boralex seem quite attractive to us right now.

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Do not hesitate to give either of us a call at 416 359-7565 or 416-359-7564 or email Sharon Kubicek or Alisa Carli if you have any questions respecting your portfolio and the prevailing investment, economic and political issues at play today.

Sharon and Alisa