Global Equity Pulse

Investors are finding potential in undervalued small caps, particularly in the banking sector, where attractive valuations align with robust fundamentals despite macroeconomic challenges. Focused stock selection remains vital for long-term value creation, emphasizing institutions with solid capital ratios and shareholder returns.

In North America, although US equities experienced significant earnings growth, a shift towards quality metrics like free cash-flow yield and ROE is advised, especially as high-quality dividend-paying sectors like health care and utilities lag behind. The demand for electricity linked to AI technology is benefiting the utility sector.

In the Asia Pacific, corporate earnings in the Asia ex-Japan region showed strong growth, indicating sustained earnings prospects amid a favorable economic outlook as interest rates ease. However, growth may vary by region, with South Korea and Taiwan expected to lead, while China and Hong Kong lag.

In Europe, moderating inflation has led to expectations of interest rate cuts into 2025, following a decrease in the Eurozone Consumer Price Index. In August 2024, global equities displayed volatility but managed gains, led by developed markets, while emerging markets underperformed.

The Japanese market faced challenges due to global economic concerns, but expectations of Fed rate cuts helped stabilize sentiment later in the month.