An unprecedented situation in global equity markets
The rise in global equity markets observed in 2023, through until the summer, was chiefly attributable to expanding valuation multiples in the most speculative sectors.
The resulting historic peak in sector concentration is comparable to the periods preceding the bursting of the technologies-media-telecoms (TMT) bubble and the 2008 financial crisis.
Consequently, the gap in growth outlook, between the most volatile and the least volatile sectors, is four times higher than the historic average.
In the context of an economic slowdown, this historically wide valuation and implied growth spreads, in favour of one single sub-segment of the market, offers some genuine relative alternatives.
For investors, opportunities may arise with defensive sectors and value stocks narrowing the gap moving forward.
