18th of May 2022
Current level of stock prices as offering enough upside to warrant an overweight.
- Global equities are now trading at 15.6-times forward earnings, and only 12.6-times outside the US.
- One point to note, the forces that pushed down stock prices are starting to abate namely: The war in Ukraine no longer seems likely to develop into a broader conflict causing more uncertainties; the number of new Covid cases in China has fallen by half; and global inflation has peaked. As more economies opening up in the second half of 2022, consumption should see pick-up continuation.
- The next 18 months of falling inflation and receding recession fears could see stocks recover much of their losses. There is a possibility that equities prices may recover to previous highs as a result.
- US Stock prices should move more inline with EPS growth after divergence at the turn of the year.
- China stocks are presenting great values after a year of regulatory clampdowns. Downside risk capped as more fiscal policies are expected to be implemented in the second half of the year.
- Market should see some form of pullbacks after recent jump in prices. Use this opportunity to accumulate into quality stocks.