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International Equities Investment Outlook: March 2021

By Richard "Crit" Thomas, CFA, CAIA
International Equities
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March 2021 Investment Outlook by Crit Thomas - International Equities
Video Transcript

In a broad sense we are entering into a global synchronized rebound. Certainly the U.S. stands out for the magnitude of its fiscal and monetary response to the crisis, but we did not act alone in these efforts.  There will be stimulus led growth around the world. And global markets excluding the U.S. have a few things going for them in a rebound relative to the US – first is valuation their markets are much cheaper than ours - and secondly is compositionally the international stock indexes are more economically sensitive, so should have a stronger rebound. So broadly I see an opportunity for international stocks to outperform as the recovery takes hold.

Price to Trailing 10-Year EPS

That said, looking around the corner, out beyond this cyclical rebound, visibility is low, but, here’s the thing both Europe and Japan have some secular growth disadvantages, and I don’t think those go away.

Relative Earnings Growth

Both of these economies will continue to struggle with low economic growth related to a shrinking labor force and growing entitlement burdens. Even with that backdrop though, if you think about it, if there is a great company with great products it really shouldn’t matter where they’re domiciled. There are selective opportunities in all markets.

Emerging Markets as a Percent of the World

Emerging markets are a different story. I don’t see them so much as a play on an economic rebound – though that certainly helps – but more of a way to capture some massive growth potential that is being presented by a huge population base that’s climbing the middle class ladder and adopting new cost saving digital services. There are already potential Alibaba sized opportunities residing in South East Asia, India, and Latin America, and there will be new companies offering products and services we haven’t even thought of, and you just have these huge populations to sell into. This is where I see a lot of future wealth generation coming from – it’s the Emerging Markets.


This commentary is for informational purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation to buy, sell or hold any security. Investing in an index is not possible. Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.

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crit thomas global market strategist

Richard "Crit" Thomas, CFA, CAIA

Global Market Strategist
Crit is responsible for examining and evaluating economic conditions, generating insights and providing a sharpened perspective on investment strategies for enriched portfolio construction.

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