Bangkok--26 Mar--Standard & Poor's
Sector plays, international equities can often provide solid portfolio performance in face of uncertainty
Slowing housing starts coupled with volatility in Chinese stocks may have contributed to the recent sell-off in global equities markets, but Standard & Poor's Equity Research sees no bear market in sight. The financial market intelligence leader provided these observations at a quarterly teleconference for financial advisors and investors this week.
While it is possible recent pullbacks may have further to go, Standard & Poor's believes the recent period of market volatility following market declines of more than 2 percent may provide a buying opportunity. Historical data shows it could be a period of strong out-performance for S&P 500 sectors, such as information technology and industrials, the latter of which Standard & Poor's favors along with healthcare.
"In our view, investor's concerns regarding the cooling housing market have not acted as a contagion for the market at large," said Sam Stovall, Chief Investment Strategist, Standard & Poor's Equity Research. 'Instead, we are still moving towards our 2007 estimates for growth and valuations, which we believe will help keep stocks more attractive than bonds. While rate reductions may support share prices, we believe there's still a need for a cautious approach and to keep an eye on earnings, while maintaining an overweight exposure to international equities."
Standard & Poor's also views it is as a good time to rebalance portfolio exposure to international equities. Although the valuations for global emerging markets are seen as attractive, the high risks involved may mean a move away for more conservative investors. At the same time, while the Yen carry trade continues to drive liquidity, S&P believes investors may want to consider taking a look at Japan as a counter-balance. Japan is one of the few developed markets where Standard & Poor's expects corporate earnings growth to accelerate in 2007.
"While there are still concerns over whether the Chinese market is appropriately valued, we believe we are in a European bull market for a fourth straight year," noted Clive McDonnell, Chief European Strategist, Standard & Poor's. "We think that the flight to quality in European markets may take longer to achieve, particularly as we increasingly take into account pension fund considerations. However, in our view, merger and acquisition activity, particularly in the banking and healthcare sectors, will drive global market growth in 2007."
These insights from Standard & Poor's leading economic and investment strategists were offered through a March 21st teleconference titled "Wrestling With Uncertainty." The teleconference featured:
- David Wyss, Standard & Poor's Chief Economist,
- Sam Stovall, Chief Investment Strategist for Standard & Poor's Equity Research,
- Clive McDonnell, Standard & Poor's Chief European Strategist, and
- Phil Edwards, Co-Head of Investment Advisory Services for Standard & Poor's.
As part of Standard & Poor's ongoing effort to provide investors with relevant and actionable investment insights, this teleconference is available for replay for the next seven days and can be accessed through two options.
Replay Web Streaming: URL: http://www.mymeetings.com , Under Events, Select Join an event Conference ID#: 6255755
Passcode: SANDP Web replay streaming will expire on Wednesday, April 18, 2007 Replay Number: 1-203-369-0430 Replay will expire on Wednesday, March 28, 2007
For further information contact:
Jeff Sexton
Tel.: 212-438-3448
Mail to: [email protected]