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:


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


Is international stock outperformance sustainable?

We examine the fundamental factors and the macro risks

Time to read: 2 min

2017 marked only the second time in the last eight years that international markets outperformed the US, with the MSCI All Country World Index (ACWI) ex-US returning 27.19%, and the S&P 500 Index returning 21.83%.1 So is this the beginning of a sustained shift in outperformance? On one hand, there is a list of risks facing international markets, from Brexit to a potential slowdown in China. But on the other hand, international companies have recently been trading at a substantial valuation discount compared with the US, and we have been seeing strong profit expansion.

What is the EQV landscape for international markets?


Are emerging markets still attractive?

Even after a 34% gain in 2017, we see continuing opportunity in EM this year

Time to read: 2 min

Emerging markets (EM) delivered in 2017, with the MSCI Emerging Markets Index returning 7.1% in the fourth quarter and 34% for the year — outperforming the developed market MSCI EAFE Index in both periods.1 This strong performance was driven by improving economic conditions and stronger earnings. Among the macro positives were a solid pickup in global trade, improvement in external accounts, upward revisions to gross domestic product (GDP) growth, benign inflation and price support for energy and commodities.

Country-specific highlights


Europe’s potential finally shows in its performance

European stocks bested the US in 2017, driven by strong earnings growth. What do we see on the horizon for 2018?

Time to read: 4 min

This time last year, the Invesco International and Global Growth team was optimistic about the better relative earnings potential that we saw building in Europe. Indeed, the trends played out to our benefit over the course of 2017. In dollar terms, European equities outperformed US equities by 3% in 2017, the first time since 2012.1 Europe’s performance was supported by healthy earnings per share (EPS) growth. Companies are scheduled to release their fourth-quarter figures over the next few weeks, and consensus estimates expect 2017 EPS growth to be in the double-digits — a level that has not been seen since 2010.1

During the last three months of 2017, Invesco International Growth Fund increased its exposure to eurozone and UK equities, after being net sellers in Europe through the first nine months of the year. To understand the bottom-up stock opportunities we’re seeing, it’s critical to examine the fundamentals of European corporations using our Earnings, Quality and Valuation (EQV) philosophy.