International Equities Surge as Financial Conditions Ease
Global markets experienced a significant boost in the third quarter, driven by easing financial conditions and aggressive stimulus measures from governments. The MSCI All Country World Ex-U.S. Index rose 8.06%, with value and cyclical shares leading the way.
Regional Performance: A Mixed Bag
Asia Ex Japan, North America, and emerging markets outperformed the index, while Europe Ex U.K. and Japan underperformed. The United Kingdom performed in line with the index. Chinese equities surged 23.49% following Beijing’s announcement of aggressive stimulus measures.
Sector Performance: Information Technology and Consumer Discretionary Lead the Way
The ClearBridge International Growth ACWI Ex-US Strategy underperformed its benchmark, but still delivered gains across all nine sectors in which it was invested. The consumer discretionary, financials, and consumer staples sectors were the primary contributors.
Stock Selection: A Key Driver of Performance
Stock selection in the IT and consumer discretionary sectors, as well as a lack of exposure to energy, drove results. Conversely, an overweight to IT, an underweight to financials, and stock selection in the industrials and health care sectors detracted from performance.
New Positions Added
The Strategy added new positions in Prysmian, Coupang, and Spotify, and exited positions in Antofagasta, Givaudan, Monday.com, Hexagon, Daifuku, and McDonald’s Japan.
Outlook: Positive but Cautious
Despite the strongly positive reaction by Chinese equities to Beijing’s monetary easing, more needs to be done to restart growth. The creation of long-term demand drivers and consumer spending is crucial. China is expected to make additional policy moves at the end of October, and the outcome of U.S. elections will provide further clarity on the path of its recovery.
Conclusion: Encouraging Conditions for Diversified Approach
The improving conditions across the investable universe create a more conducive environment for a diversified approach to growth. Recent performance has highlighted the benefits of complementing core secular growth positions with opportunistic ownership of structural growers and selective exposure to emerging growth names.
Performance Summary
- MSCI All Country World Ex-U.S. Index: 8.06%
- MSCI ACWI Ex-U.S. Small Cap Index: 9.03%
- MSCI Emerging Markets Index: 8.72%
- ClearBridge International Growth ACWI Ex-US Strategy: underperformed its benchmark
Disclaimer
Past performance is no guarantee of future results. Copyright 2024 ClearBridge Investments. All opinions and data included in this commentary are as of the publication date and are subject to change.
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