Global Equities Market Views - August 2023
Bell Asset Management
Specialist global equities manager with a Quality At Reasonable Price (QARP) approach.
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Global Market Commentary
Global markets were softer in USD terms in August and the momentum for the ‘Magnificent Seven’ (Apple, Nvidia, Meta, Google, Amazon, Microsoft and Tesla) started to slow, with only 3 of the 7 names delivering a positive return during the month (in USD terms). Each of these stocks has still outperformed the market by a wide margin during 2023 and remain responsible for a material portion of the overall market rally this year but investors should remain vigilant about positioning given the valuation expansion in many of these names.
From a style perspective, there was very little divergence in ‘Value’ and ‘Growth’ performance during the month. The ‘Growth’ style remains by far the strongest performer in 2023, with large cap growth stocks leading the way. SMID caps lagged again in August relative to large/mega caps, extending their year-to-date underperformance. Valuations in SMID caps continue to look very attractive relative to historical levels and the broader market, particularly given the superior long-term earnings growth prospects of this segment of the market.?
Key focal points from a global economic data standpoint during August included weakness in China and a rise in bond yields in the US. In China, the property crisis worsened, with Chinese property giant, Country Garden, flirting with default and a number of other developers filing for bankruptcy. We also saw weak economic data continue for China, with Chinese exports falling 9% year-over-year in August and July headline CPI falling into deflation territory (-0.3%). The Chinese government has started to implement some stimulus measures, but more is likely needed to shore up the economy and confidence levels.
Market Outlook
We remain constructive on the outlook for quality companies and believe our portfolio is well positioned for outperformance looking forward. With some pockets of exception, valuations across the market look reasonably attractive and earnings growth is set to reaccelerate in 2024 after flat lining this year. Therefore, while there are always plenty of risk factors to remain cognisant of, we continue to find good investment opportunities that we believe can generate strong returns for investors over the long term.
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Important Information
Note: For Advisers & Wholesale Investors only
Bell Asset Management Limited (BAM) ABN 84 092 278 647, AFSL 231091 is the responsible entity for the Bell Global Equities Fund, Bell Global Sustainable Fund and the Bell Global Emerging Companies Fund (the Funds). Distribution of the Funds is undertaken by Channel Capital Pty Ltd ACN 162 591 568 AR No. 001274413 (Channel). Neither BAM nor Channel warrant the accuracy, reliability or completeness of the information. This report has been prepared by BAM for information purposes only and does not take into consideration the investment objectives, financial circumstances or needs of any particular recipient – it contains general information only.?Before making any decision in relation to the Funds, you should consider your needs and objectives, consult with a licensed financial adviser and obtain a copy of the product disclosure statement, which is available by calling BAM on 1300 305 476 or visiting www.bellasset.com.au. No representation or warranty, express or implied, is made as to the accuracy, completeness or reasonableness of any assumption contained in this report. Past performance is not necessarily indicative of expected future performance.?BAM has issued a Target Market Determination (TMD) for each Fund discussed in this presentation and each Fund’s TMD is available at www.bellasset.com.au.