- Equity markets have staged a strong rebound since we upgraded the markets on 12 February 2016
- Market Performance: US +12.4%, Europe +11.5%, Brazil +36.9% (in local currency terms)
- While equities have moved sharply higher, underlying fundamentals have either remained the same or posted slight deterioration for the three markets
- Higher prices with lower earnings estimates have resulted in higher valuations for all three markets, leading to lower forecasted returns for investors
- Expected Annualised 2 Year Returns: US -0.6%, Europe +1.2%, Brazil +4.1% (in local currency terms)
- We are downgrading the Star Ratings of the markets as follows:
- US - From 2.5 "Neutral" to 2.0 "Unattractive"
- Europe - From 3.0 "Attractive" to 2.5 "Neutral"
- Brazil - From 4.0 "Very Attractive" to 3.0 "Attractive"
- Investors should not chase prices or performances, consider seeking more defensive strategies for US and Europe, relook their portfolio allocations
- Full updates for all three markets to follow
Chart 1: US Equities
Chart 2: European Equities
Chart 3: Brazil Equities
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