After the expansion: Are you ready for what might come next?

Diversification has been in hibernation during this bull market, but it may be coming out of its slumber

Time to read: 3 min

Assuming we don’t fall into recession during the next four months, July 2019 will mark a new record for the longest US economic expansion since the National Bureau of Economic Research started tracking economic cycles way back in the 1850s.  Throughout this expansion, holding assets other than stocks has come at a steeper cost in terms of underperformance. But while investors may be feeling frustrated by the results of their diversification strategies, I believe it’s important to examine what can happen in the years following an expansion. History tells us that this is when the benefits of diversification have been most apparent.

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Digital gaming = serious business

Global revenue has soared, and these five-long-term growth drivers could take it to the next level

Time to read: 4 min

In a world where new video games can have bigger opening weekends than Hollywood blockbusters, it’s clear that digital gaming is serious business. The digital gaming industry’s global revenues have almost doubled over the past seven years (from $71 billion in 2012 to $135 billion in 2018) — and over the next three years, revenue is forecasted to grow at a compound annual growth rate of approximately 9%.1

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Are emerging markets turning a corner?

A tough fourth quarter led to a solid January, and valuations remain compelling

Time to read: 2 min

The fourth quarter of 2018 was negative for both emerging and developed markets. However, we saw emerging market headwinds start to ease toward the end of the year, thanks to stabilizing currencies, lower oil prices, lower inflation pressures and progress in the US-China trade conflict. In fact, EM stocks rebounded strongly in January, yet valuations have remained at a discount to developed markets. All told, we believe there are compelling opportunities to be found in emerging markets.

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The deteriorating state of earnings in Asia

When will prices in China and Japan become attractive?

Time to read: 4 min

Slowing global trade has weighed down export-oriented markets in Asia, and the regional earnings outlook has been deteriorating rapidly. Over the past six months, earnings expectations have been revised down 4% for the MSCI All Country Asia Pacific Ex-Japan Index.1 For December, the earnings revision ratio (which compares positive versus negative revisions) fell to 0.39, the worst reading ever recorded outside of a recession.2 The downgrades were broad-based and included all Asian economies, with 13 of 16 sectors (as defined by Merrill Lynch) experiencing at least twice as many downgrades as upgrades.1 Despite this gloom and doom, some Asian companies are beginning to look attractive using our team’s Earnings, Quality and Valuation (EQV) criteria.

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European uncertainty has lowered the price tag for quality stocks

Fourth-quarter volatility expanded the opportunity set for those looking for a deal

Time to read: 3 min

The fourth quarter of 2018 was tough on investors in European equities, and uncertainty appears to be rising as we enter 2019. But, the Invesco International and Global Growth team believes that environments like these can result in great prices for attractive businesses. In fact, we haven’t seen valuations in Europe this low since 2013. So, what is our outlook for Europe, and where are we finding opportunity?

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Despite lower GDP growth, European earnings may accelerate in 2019

Brexit uncertainty has captured the headlines, but we are constructive on quality growth holdings

Time to read: 3 min

For months, Europe has grappled with geopolitical uncertainty in the form of ongoing Brexit negotiations (which face a looming March 2019 deadline) and Italy’s populist coalition government. In this environment, UK companies have appeared less likely to invest — which could lead to lower European growth levels next year.

So what do Brexit doubts mean for our team’s Earnings, Quality, Valuation (EQV) outlook for the UK and eurozone? Let’s begin by dispelling three myths about the area.

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