6 min read | by Srinivas Polaki | I recently spent ten days in Japan, meeting with 35 companies across the country's broad industrial ecosystem. I observed a notable shift within Japanese corporations, marked by a heightened willingness to engage with shareholders and proactively address competitive pressures. The automotive sector, a cornerstone of Japan’s industrial strength, is experiencing profound disruption that is cascading through the entire supply chain and injecting a sense of urgency to realign corporate strategies.
10 min read | Over the last several months, industry pundits have been hyper-focused on a handful of topics: the effects of a Trump presidency on trade relations and tariff policies, the economic situation in China, the continued dominance of the ‘Magnificent 7’ stocks, and the related “US exceptionalism” narrative. In nearly all these conversations, emerging markets have been assigned a “murky at best” outlook. However, a closer look reveals that valuations, profitability, and earnings growth are quite attractive across many emerging market countries; EM is poised to “trump” tariff threats.
10 min read | Divergence in the performance between AI-led US markets and the rest of the world accelerated in the fourth quarter, fueled by optimism after the Trump election victory and a strong US dollar. “US exceptionalism” continues to be the mantra in markets, and this has certainly been reflected in equity market performance, elevated valuations of the ‘Magnificent 7’ stocks, and the premium afforded to most US companies relative to their international peers. As we assess the narrow market leadership that is extended by most measures and by historical comparisons, we believe that, while possible, it is unlikely that many companies, particularly those in the US, can deliver on the long-term expectations embedded in their valuations.
10 min read | Divergence in the performance between AI-led US markets and the rest of the world accelerated in the fourth quarter, fueled by optimism after the Trump election victory and a strong US dollar. “US exceptionalism” continues to be the mantra in markets, and this has certainly been reflected in equity market performance, elevated valuations of the ‘Magnificent 7’ stocks, and the premium afforded to most US companies relative to their international peers. As we assess the narrow market leadership that is extended by most measures and by historical comparisons, we believe that, while possible, it is unlikely that many companies, particularly those in the US, can deliver on the long-term expectations embedded in their valuations.
9 min read | After considerable volatility throughout the quarter, emerging markets performance took a dramatic positive turn during the last few weeks of September when Chinese leadership announced sweeping measures, both monetary and regulatory, to support the economy and boost capital markets. Whether or not it will ultimately be successful remains to be seen. Two of the other themes we are investigating this quarter can, for different reasons, be filed under the saying “don’t judge a book by its cover” – first, the relationship between return of capital and actual yields, and second, the investment opportunity set in the EM pharma sector.
7 min read | Central bank policy actions, easing inflationary pressures, and expectations of a “soft” economic landing remained supportive for equities. Market leadership broadened away from a small subset of large-cap growth stocks and deep cyclicals, a trend both overdue and supported by fundamentals. Although a high degree of crowding, complacency, and lofty expectations remain in the areas that have led markets in recent years, elsewhere in international markets there are plentiful investment opportunities offering attractive value with more sustainable and/or improving earnings prospects. From our perspective, the greatest risks currently stem from macro and geopolitical dynamics, as well as corporate earnings disappointments in cyclical segments of the market.
7 min read | Central bank policy actions, easing inflationary pressures, and expectations of a “soft” economic landing remained supportive for equities. Market leadership broadened away from a small subset of large-cap growth stocks and deep cyclicals, a trend both overdue and supported by fundamentals. Although a high degree of crowding, complacency, and lofty expectations remain in the areas that have led markets in recent years, elsewhere in global markets there are plentiful investment opportunities offering attractive value with more sustainable and/or improving earnings prospects. From our perspective, the greatest risks currently stem from macro and geopolitical dynamics, as well as corporate earnings disappointments in cyclical segments of the market.
6 min read | by Robert Silgardo | Earlier this year, I spent two weeks in Southeast Asia to assess investment opportunities, test our investment theses, and deepen our local network across the region. I came away excited about Vietnam and with cautious optimism about opportunities in China. Meanwhile, some questions remain regarding Thailand’s future.
8 min read | Market exuberance related to technology innovation, and most recently AI, has driven a handful of developed market stocks to dominate global indices for years, and EM is not immune from the effects. The IT sector has contributed dramatically to the overall narrow leadership found in emerging markets; the sector’s weight within the index reached new peaks this quarter. We believe that embedded expectations for many tech companies are excessive, driving us to look for underappreciated and contrarian opportunities elsewhere. Simultaneously, a busy global electoral calendar introduces a higher likelihood of market volatility, creating a landscape ripe for identifying new investments at attractive valuations.
6 min read | We are believers in the AI renaissance and its long-term potential to drive productivity enhancements, but we also believe embedded expectations are excessive. The “obvious” has seldom been more crowded, and this is reflected in high valuations and expectations. We share Jeff Bezos’ view that AI is a horizontal technology that will benefit a wide range of companies. Observing value creation involving other transformative innovations – electricity, light bulbs, railroads, and the internet, to name a few – reveals that the greatest returns were realized outside of the companies that garnered the early excitement.
