VTAR Summary for Our Calls
Megatrends VTAR & Commentary
Equity valuations are cheaper compared to six months ago. Fund flows remain resilient despite momentum slowing down sharply in broader equity markets. Higher energy prices and the need for energy self-sufficiency have renewed positive interest for Sustainability investing. Be aware of the acute risk of greenwashing.
Global Healthcare valuations are at a discount compared to broader global equities while earnings growth prospects remain strong. This sector is less sensitive to rising bond yields than other defensive sectors.
Valuations for both onshore and offshore equities are attractive. China's zero-COVID policy continues to present headwinds in the near term. However, more easing measures are expected in H2 to support economic growth. The Chinese government may relax its zero-COVID stance towards Q4 2022.
Valuations are attractive relative to historical averages while leading economic indicators reflect resilience in economic activity. China's reopening will be positive for the region’s recovery. On the flipside, China's slowdown may present downside risks to the recovery momentum.
Digitalisation and innovation are key pillars in the new economy and a key focus of US-China tensions. Both countries are expected to invest heavily in these strategic sectors. Valuations remain high despite the recent correction, and the introduction of a global minimum tax regime will lead to revised earnings estimates.
More Fed rate hikes may lead to less spending and investment, weighing on sentiment and growth. Valuations are higher than the historical average but have come down with concerns over slowing growth. Be selective and focus on more defensive plays or sectors that benefit from higher rates.
High Conviction Calls VTAR & Commentary
Following concerns over the Russia-Ukraine crisis and slowing growth, valuations continue to improve and remain reasonable relative to the broader S&P 500 Index. However, the sector will continue to benefit from Fed rate hikes and loan growth recovery. Rising competition from alternative payment platforms and cryptocurrencies could pressure traditional banking revenues.
Valuations are attractive relative to historical averages and earnings are at pre-pandemic peaks. A weaker JPY is generally positive for the market, and businesses are likely to benefit from re-opening.