Valuations remain a hurdle in Japan

However, we’ve uncovered two recent opportunities that meet our criteria

Time to read: 2 min

Japan has been a market where investors have been buying growth at all costs, and the opportunity set remains limited from a valuation perspective, in our view. However, the Invesco International and Global Growth team has been able to identify select opportunities so far this year. Invesco International Growth Fund remains underweight Japan, but we added to our exposure in the second quarter in companies that meet our Earnings, Quality and Valuation (EQV) criteria.

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Heightened volatility rattles global markets, but the US economy shows no signs of weakening

So how did earnings expectations respond to the second-quarter pickup in volatility?

Time to read: 3 min

For international markets, the second quarter of 2018 was marked by continued volatility. Quantitative tightening, balance sheet normalization, trade war concerns and political uncertainty all played a critical role in challenging the synchronized global growth we watched unfold last year. So how did earnings expectations respond over the past three months — and what did the pickup in volatility mean for our Earnings, Quality and Valuation (EQV) approach?

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As markets refocus on fundamentals, EQV takes the spotlight

Could we see an increased market focus on quality and valuation as the strong earnings upgrade cycle appears to fade?

Time to read: 2 min

Confidence in global synchronized economic growth has fostered a momentum-driven market since early 2017, with many investors buying companies with positive earnings outlooks but showing little regard for valuations. This type of market can be tough for the Invesco International and Global Growth team, as valuation is an important aspect of our Earnings, Quality and Valuation (EQV) investment process. In recent months, the market narrative has been shaken by concerns over trade wars, political uncertainty and a moderation in economic growth outlooks. We believe that portfolios built with our well-balanced EQV philosophy should be well-positioned to potentially benefit when the market refocuses on quality and valuation.

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Emerging markets sell off in the second quarter

Trade tensions, macro concerns and a strong US dollar add volatility and possible opportunity

Time to read: 3 min

By any measure, emerging markets (EMs), as represented by the MSCI Emerging Markets Index, had a tough second quarter, dropping 8.7%1 in US dollar terms and significantly trailing developed markets. The underperformance was mainly driven by macro concerns, trade tensions and election uncertainties. Taken together, these had a negative impact on consumer and business confidence, as well as growth forecasts. However, while we don’t expect a quick resolution to these issues, the Invesco International and Global Growth team continues to find attractive EM opportunities through our bottom-up Earnings, Quality and Valuation (EQV) approach.

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Asia feels the symptoms of China’s declining economic health

China’s weakness has opened the door for new investment opportunities in the region

Time to read: 2 min

“When China sneezes, the rest of Asia catches a cold.” That’s an old saying, but it’s taken on new relevance as Asia’s symptoms have recently worsened. Concerns over the US-China trade war and weaker currencies have taken their toll on the region.

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