European equities may benefit as cycles diverge

Europe looks more fairly valued than the US, and has good earnings potential

Time to read: 2 min

Markets around the world experienced the return of volatility during the first quarter of 2018, as central banks tightened policy and the specter of a trade war grew. Despite these pressures, the European market may offer the most opportunity.

Notwithstanding the well-publicized Brexit negotiations and a coalition stalemate in Italy following that country’s March elections, I can’t recall political risk in Europe being this muted for a long time.  And, while I believe we’re in the very late innings of the US bull market, an argument could be made that Europe is in a different stock market cycle, without the same level of froth and extreme valuation.1

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Trade talk tempers Asian market optimism

Quality and valuation may become more important to investors if volatility continues

Time to read: 3 min

Investors began 2018 with a generally optimistic view, but this euphoria faded by quarter-end as protectionism and talk of a US/China trade war became a key concern. Despite investor pessimism, we expect further volatility might create the opportunity to invest in high-quality Asian equities at lower valuations.

Pre-negotiation posturing

Market volatility spiked as US President Donald Trump started delivering

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Looking for quality growth in a volatile world

A weak 1Q rattled investors, but we welcome the opportunity to find quality companies at attractive valuations

Time to read: 3 min

Early this year, concerns over higher inflation and interest rates led to a rise in volatility, and global equity indices ended the quarter down in most markets. However, despite the weak start to 2018, the Invesco International and Global Growth team sees positive signs among a number of important Earnings, Quality and Valuation (EQV) measures. The recent spike in volatility is a welcome development for investors like ourselves who emphasize valuation as a critical input to risk and return potential.

The quarter in review

In dollar terms,

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What’s the outlook for Asian equities?

Earnings expectations dim across the region, while China’s reforms remain a bright spot

Time to read: 4 min

The synchronized global recovery is being felt across Asia, but the level of opportunity varies by region. Below, I discuss the macro environment as well as the Earnings, Quality and Valuation (EQV) statistics that influence my team’s bottom-up stock-picking decisions.

Japan: Earnings are a bright spot, but quality is lacking

The Japanese stock market reached a new 25-year high in 2017, and the Nikkei 225 Index posted a 10% return in the fourth quarter.1 However, even with a 22% full-year return for the index, Japan was the weakest international region in 2017,1 and it’s the largest underweight of Invesco International Growth Fund.

On the bright side:

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Latin America: Will politics overshadow GDP growth?

Earnings expectations are improving in Brazil, but high uncertainty hinders Mexican growth

Time to read: 2 min

On the back of a broad pickup in Latin American economic activity, real gross domestic product (GDP) growth is expected to accelerate this year.1 However, continued political uncertainty and critical elections in Mexico and Brazil could weigh on the region. With market exposure in both countries, what are the key areas the Invesco International Growth Fund team will be watching in 2018?

Brazil: Earnings expectations are on the rise, but political doubts linger

Despite a year of political turmoil and delayed reform, Brazil’s fundamentals showed signs of

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