Be Mindful of Headwinds

Global and International Equity 2024 Perspective

Global economies, as well as corporate profits, have remained resilient despite enduring the regional banking crisis, the debt ceiling debate, insolvent Chinese property companies, two major geopolitical conflicts and high interest rates, among other things. The effects of these may take time to manifest and could result in a slowdown for the global economy in the quarters ahead.

Utilizing the S&P 500® Index as a proxy for the equity markets, it is currently trading at 19x forward earnings reflecting 2024 earnings growth expectations of 11%. We believe this estimate appears ambitious, given a decelerating growth outlook, and is likely to be revised lower, making current valuations modestly unattractive depending on the market.

Finally, investors should be mindful of China’s economic policies, given the challenges in the property market and its effect on household wealth. In recent months, the government has implemented modest stimulus programs, including a $137 billion sovereign debt package for targeted construction projects, as well as minor rate cuts on short-term loans. All in all, China has been measured in its approach to revitalizing growth and has yet to restore confidence in the market. If China can manage to contain the risks to the property sector and restore investor confidence, we can potentially see economic activity increase globally.

The above is an excerpt from Rockefeller Asset Management’s comprehensive 2024 Perspectives on the Year Ahead. To access the full report, including unique insights from Small Cap, Global and International Equity, Fixed Income and Thematics, click below.