Portfolio Notes - August 2024

Country Ranking Model - August 2024

 

Source: MSCI

 

August Country Rankings

Poland (#1): Poland remains in top spot overall this month with 7th-ranked fundamentals, 9th-ranked momentum, 25th-ranked risk and 1st-ranked valuations. Poland recorded the EU’s largest annual and quarterly GDP growth in the second quarter of 2024. In annual terms, Poland’s economy grew 4%, ahead of high flying Cyprus (3.7%) and Spain (2.9%) and well ahead of the EU as a whole, which grew by 0.8%. In contrast, the EU’s largest economy, Germany, shrunk by -0.1%. Along with these strong fundamental tailwinds, Poland’s cheap valuations continue to propel the country to the top of the rankings. Poland has the lowest PEG ratio in our universe for example.   

UK (#2): The UK moves into second place overall this month with 13th-ranked fundamentals, 10th-ranked momentum, 6th-ranked risk and 10th-ranked valuations. The country has maintained a steady pace of recovery from last year’s recession, putting new Prime Minister Keir Starmer on a strong economic footing as he looks to boost growth and repair public finances. GDP rose 0.6% in 2Q after an 0.7% gain in the first three months of the year, reflecting strength in government spending and the services sector. Britain is comfortably outgrowing other major European economies.

Norway (#3): Norway rounds out the top three this month with 14th-ranked fundamentals, 20th-ranked momentum, 8th-ranked valuations and an impressive 2nd place ranking in terms of risk. Norway’s low risk is driven by a stable political system, a decrease in semi standard deviation and a highly competitive Krone. Relative to the All-Country World Index, Norway’s equity market is concentrated in the energy sector. Equinor, the majority state-owned oil, gas and renewable energy provider is the largest company in the country by market cap

Country Performance:

Data as of 7.31.2024
Source: MSCI

Country Ranking Model

As of 7.31.2024
Source: Accuvest Global Advisors

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - June 2024

Country Ranking Model - June 2024

 

Source: MSCI

 

June Country Rankings

Country Spotlight: United Kingdom

It’s been a long time since UK stocks were in favor. Chronically low productivity growth, aging demographics and high public debt levels have dragged on the UK’s economy for the better part of a decade, with the 2016 Brexit referendum casting a long shadow of uncertainty that led many businesses to rethink or delay investment. In fact,  real business investment in the UK still has not recovered to 2016 levels, a stark contrast to the double digit percentage increases in other G7 economies. Similarly, UK goods trade has underperformed other advanced economies by roughly 15% since the referendum. The country has also suffered from some of the highest post-pandemic inflation in developed markets, peaking at 11.1% in October of 2022. Economic malaise has gone hand in hand with political instability, with Liz Truss’ high profile, short-lived stint as prime minister coinciding with the pound falling to $1.03 in late September 2022 - an all-time low against the US dollar.

Indeed, in October of 2022 the UK was languishing in 30th place out of 33 countries in our country ranking model. Fortunately, there is strong evidence of a turnaround. Driven by improvements in fundamentals and momentum, the UK has risen over 10 places this month, and now ranks 1st overall, with 9th ranked fundamentals, 6th ranked momentum, 7th ranked risk and 8th ranked valuations.

Britain's economy grew 0.6% in the first quarter of 2024, the most in nearly three years, ending the shallow recession it entered in the second half of last year. Aditionally, the UK Manufacturing PMI rose to 51.3 and the Services PMI held firm at 52.9 in May, both above the 50 level that indicates expansion. Mirroring these positive developments, the long-term sales per share growth trend for UK businesses improved.

With CPI inflation dropping to 2.3% in April (thanks to a 12% drop in household energy bills) and core inflation declining to 3.9%, market participants appear to have confidence that disinflation will continue and estimate that the first interest rate cuts by the Bank of England will come in August of this year. With rate cuts on the horizon, money is flowing into UK assets. While the All Country World Index was down -3.3% in April, the MSCI UK Index was up 1.9%, and remains in a solid technical uptrend, returning 3.6% in the month of May.   

Even the UK’s risk factor score has improved this month with a decrease in the credit default swap spread, and at the same time, UK valuations have held steady at a solid 8th ranking in our model. With an earnings yield of 8.2% and a price/book ratio of 1.8, the UK has some of the cheapest valuations around, especially compared to other developed markets.

With the economy showing signs of life, inflation on the decline, and investor sentiment turning positive, our multi-factor analysis suggests that British equities are entering a long-awaited revival.

Country Performance:

Data as of 5.31.2024
Source: MSCI

Country Ranking Model

As of 5.31.2024
Source: Accuvest Global Advisors

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - April 2024

Country Ranking Model - APRIL 2024

 

Source: MSCI

 

April Country Rankings

Italy (#1):

Moving into first place this month is Italy with a combination of excellent fundamentals (7th), low risk (4th), attractive valuations (6th) and improving momentum (10th). Year to date, the MSCI Italy index is up13.7%, propelled by companies such as Unicredit SPA, Intesa Sanpaolo, Ferrari, and Stellantis Europe (formerly Fiat-Chrysler) in the banking and automobile sectors. With real GDP growth of 0.6% YoY forecast for 2024, the Italian economy appears to have avoided recession and is set to grow faster than many of its European neighbors.

Poland (#2):

Despite Poland’s stellar fundamentals (2nd), momentum (3rd), and valuations (1st), it has slipped into second place this month due to an increase in risk (ranked 30th) that was driven by greater downside deviation and widening credit default swap spreads. Poland’s economy continues to grow at one of the fastest rates in Europe, with 2.9% real GDP growth forecast for 2024.

Netherlands (#3):

Entering the top 3 this month is the Netherlands. The MSCI Netherlands index is dominated by ASML, which carries a 22% weighting. The company is the leading provider of equipment to computer chip makers worldwide and boasted a valuation of $383 billion as of March 31st. The stock’s impressive 28% year-to-date price increase has been fueled by the surge in demand for AI. As semiconductors have become ever more in demand, the value of chip-making equipment continues to grow.

Country Performance:

Data as of 3.31.2024
Source: MSCI

Country Ranking Model

As of 3.31.2024

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - February 2024

Country Ranking Model - February 2024

 

Source: MSCI

 

February Country Rankings

Poland (#1):

Poland remains in first place overall, with excellent fundamentals (ranked #1), valuations (#1) and momentum (#3). Poland has tripled the value of its economy in the last 30 years with some of the highest economic growth rates in the world. The country capitalized on its Communist legacy of industrialization and has attracted foreign investments from the West. This, in turn, stimulated domestic production, successfully inserting the country’s economy into global supply chains. Orlen SA serves as a good example of Poland’s integration into the global economy. The oil refiner was born out of the privatization and merger of two failing state-run petrochemical firms. Today, the company supplies energy to over 100 million Europeans and their products are sold across six continents. Orlen holds a 13.4% weighting in the MSCI Poland index.

Italy (#2):

Italy ranks well across all four factors, but the country’s valuations in particular stand out (ranked 3rd overall). With an earnings yield of 10.4%, price-to-cash earnings of only 5.9, and forward P/E of 9.0, Italian equities are a bargain. With global interest rates higher than they have been in decades, we believe the value factor is primed for outperformance.

Germany (#3):

Germany’s economy contracted -0.3% YoY in 2023 and just barely avoided a technical recession. However, the economy appears to have troughed, and corporate fundamentals are rebounding. Germany is ranked 8th from a fundamental factor perspective. Meanwhile from a risk perspective, Germany is ranked 3rd. The premiums on German credit default swaps are among the lowest in our universe.

Country Performance:

Data as of 1.31.2024
Source: MSCI

Country Ranking Model

As of 1.31.2024

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - November 2023

Country Ranking Model - November 2023

 
 

November Country Rankings

Poland (#1):

Poland is the best performing country in our universe year to date, up approximately 25%. It is ranked 1st in terms of momentum, ranked 2nd in fundamentals and ranked 3rd in valuations. Polish stocks defied a global sell off in October as a bloc of pro-European opposition parties unseated the nationalist government in the recent elections. Investors are betting that the new administration will help unlock funds frozen amid disputes between the European Commission and the outgoing party who had governed Poland for the last eight years. Strategists across the Street have turned more positive on the Eastern European country.

Italy (#2):

Italy is another country with excellent momentum (ranked 2nd), attractive valuations (ranked 4th) and strong fundamentals (ranked 10th). Italy has been given a boost this month as Moody’s has raised the country’s sovereign debt outlook to stable from negative and kept the country’s investment grade credit rating (Baa3). In another vote of confidence, spreads between Italian and German bonds have narrowed significantly in recent weeks, suggesting that concerns over underlying stress in the Eurozone monetary union may be unfounded.

Austria (#3):

Austria has the second most attractive valuations in our universe. To illustrate, it has an earnings yield of 16% and a price to book value of 0.8. In contrast, the USA (as measured by the MSCI USA index) is the most expensive country in our universe with an earnings yield of 4.5% and a price to book ratio of 3.8. Austria’s #3 overall ranking is also supported by low risk (ranked 6th), high momentum (ranked 11th), and decent fundamentals (ranked 15th).

Country Performance:

Data as of 10.31.2023
Source: MSCI

Country Ranking Model

As of 10.31.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - August 2023

Country Ranking Model - August 2023

 
 

August Country Rankings

Chile (#1):

Chile remains in first place this month. The country’s economic activity is picking up from its lows earlier this year with the economy expanding in June on a surge in mining. Additionally, the country’s central bank is increasingly dovish as inflation heads back toward target. With inflation falling to 6.4% in July from 7.6% in June, the central bank of Chile responded by cutting rates by a full percentage point.

Poland (#2):

Poland is the top-performing country in our universe year to date as reflected in its first-place momentum ranking. Poland has a current account balance that, on a 12-month rolling basis is approaching 0% of GDP as the country benefits from a sizeable improvement in terms of trade. Like Chile, Poland’s central bank is becoming increasingly dovish, and while rate cuts have not begun, they are anticipated in September.

Brazil (#3):

Brazil is plentiful in natural resources and is one of the biggest exporters of a variety of commodities including bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, petroleum and timber. With the global economy proving to be more resilient than expected and with many commodities in a deficit of supply, we believe Brazil can continue to outperform the global benchmark.

Country Performance:

Data as of 7.31.2023
Source: MSCI

Country Ranking Model

As of 7.31.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - June 2023

Country Ranking Model - June 2023

 

Source: MSCI

 

June Country Rankings

Chile (#1): Moving into first place this month is Chile with the strongest fundamentals in our universe. Chilean earnings growth, sales per share and ROE have remained very strong this year. Chile also has the most attractive valuations in our universe, as evidenced by an impressive earnings yield of 17.9%. Other factors that have helped Chile include the Chilean Peso remaining remarkably stable, consistently trading near the 1 USD: 800 CLP mark. Also,China’s economic re-opening has boosted the country’s important commodity industry. Fully 67% of Chile’s copper exports go to China.

Spain (#2): Spain’s economy has been resilient in the face of slowing global economic growth. In fact, the Bank of Spain recently raised its forecast for Spain's GDP in 2023, predicting that it will grow by 2.3%, 0.7% higher than its previous forecast in March.

Poland (#3):

Poland has a growing tech sector and is benefitting from an influx of investment from large multinational companies looking to diversify their operations away from China. Alphabet, Visa and Intel are just a few of the companies that have announced major projects in the country this year. Last year foreign companies created 43,000 new jobs in the services industry alone, a 40% increase from 2021. Part of the reason for this boom is the improvement in Poland’s trade balance which has helped the zloty appreciate to a two-year high against the euro.

Country Performance:

Data as of 5.31.2023
Source: MSCI

Country Ranking Model

As of 5.31.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - May 2023

Country Ranking Model - May 2023

 

Source: MSCI

 

There was little change at the top of our rankings this month. Western Europe continues to be well represented in our model, as does Latin America with Chile, Brazil and Mexico all overweight. Interestingly, the world’s two largest economies, China and the U.S., screen poorly from a multi-factor perspective and rank towards the bottom of the table.

Concerns over delisting, regulatory crackdowns and geo-politics are clouding the investment case for Chinese stocks. China ranks last in terms of political risk in our universe and was the worst performer on the month, down -5.16%. Nevertheless, Chinese fundamentals at both the company and macro level are compelling. Indeed, in contrast to Western economies that are flirting with recession, the Chinese economy registered Real GDP growth of 4.5% YoY in Q1 2023.

Similarly, the U.S. shows strong fundamentals relative to other countries in our universe. However, it has very expensive valuations. Furthermore, risk has increased, as evidenced by a widening of CDS spreads in the face of a potential failure to lift the debt ceiling.

May Country Rankings

Spain (#1): Spain has moved into first place this month. Spain ranks well across the board, but is particularly strong in terms of momentum (ranked 3rd) and valuations (ranked 9th). The country is expected to avoid a recession in the near term, and forecasts suggest that growth, albeit subdued, is likely to be higher than in other Eurozone economies in 2023.

Italy (#2): Italy, like Spain, is strong from a momentum and valuation perspective (ranked 4th and 5th respectively). The Italian economy has been resilient amid the global slowdown and economic forecasts are encouraging. For example, the IMF projects that Italy’s 2023 annual inflation rate will come in at 4.5%, which is significantly lower than the forecast for the Eurozone at 5.3%. Stocks such as Unicredit, Moncler and Ferrari have helped Italy outperform the global index this year.

Chile (#3): Chile has number one-ranked valuations, excellent fundamentals (ranked 4th), strong momentum (ranked 8th) but very high risk (ranked 30th). Chile underperformed on the month as it was dragged down by the Materials sector, with SQM (the Chilean chemical giant) posting negative returns in the face of falling lithium prices.

Country Performance:

Data as of 4.28.2023
Source: MSCI

Country Ranking Model

As of 4.28.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - April 2023

Country Ranking Model - April 2023

 

Source: MSCI

 

For the first time in a long time, Southern Europe is well represented at the top of our rankings, with Italy and Spain ranked first and second respectively. Post the 2011 Euro-zone debt crisis, these countries have been able to navigate the pitfalls inherent to the single-currency monetary union via compliance with EU fiscal rules and an absence of severe macroeconomic imbalances. This has become evident considering that in the midst of the ECB’s interest rate hiking cycle, fear of potential Euro-Zone fragmentation has been virtually non-existent. The ECB’s creation of the Transmission Protection Instrument (TPI), a sovereign bond purchasing scheme designed to be activated during times of market stress, has served to further support confidence.

Now that energy prices have declined and Russia-Ukraine concerns have subsided, investors are finally warming up to the idea that Europe, with its cheap valuations, strong earnings growth and an undervalued currency, warrants increased exposure in portfolios.

European apparel and luxury brands have been big winners this quarter as the consumer continues to spend and China’s reopening supports sales. Italy has been a big beneficiary with companies such as Ferrari up 26.5% and Moncler up 28%. Similarly, Spain’s fashion giant INDITEX returned over 24%. France, the ultimate luxury goods destination, is currently ranked second in terms of Momentum on the back of LVMH and Hermes up 27% and 31% respectively.

April Country Rankings

Italy (#1): Italy remains in first place overall with excellent Momentum (ranked 4th), attractive Valuations (6th), strong Fundamentals (9th) and relatively low Risk (17th).  

Spain (#2): Spain has risen five places into second place this month with excellent price momentum and strong technicals. Spain’s real GDP growth in 2022 was significantly greater than the Euro Area average, growing by 5.5% compared to 3.5%. We see this trend continuing, as evidenced by the IMF increasing Spain’s growth forecasts to 1.5% in 2023 and 2.0% in 2024, much greater than the Euro-Area projections of 1.3% in 2023 and 1.4% in 2024.

Chile (#3): Chile has re-entered the top 3 this month owing to its very attractive fundamentals (8th), momentum (6th) and number one ranked valuations. For many months, Chile’s valuations have registered near the top of the universe across a wide range of metrics including earnings yield, PEG ratio and P/B. Chile’s risk is what is holding the country back (ranked 29th) as it has, among other things, a  relatively overvalued currency and high downside volatility.

Country Performance

Data as of 3.31.2023
Source: MSCI

Country Ranking Model

As of 3.31.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Portfolio Notes - March 2023

Country Ranking Model - March 2023

 

Source: MSCI

 

March Country Rankings

Italy (#1): Italy remains in first place with excellent Momentum (ranked 5th), attractive Valuations (5th), strong Fundamentals (9th) and low Risk (12th). Italy’s cheap valuations can be seen in its price to book ratio of only 1.2 and its strong price momentum is reflected in technicals that are giving strong buy signals. Blue chip stocks and the Old Economy are well represented in the in the MSCI Italy 25/50 Index with the Financials, Utilities and Energy sectors constituting nearly 60% of the index.

Austria (#2): Austria has risen from 12th place at the beginning of the year to second place this month. Encouragingly, while Fundamentals, Momentum and Risk have all improved, Valuations have remained cheap. Austrian GDP grew by an impressive 5% in 2022, exceeding the eurozone’s reading of 3.5%. While no country would be completely immune to a potential global economic downturn in 2023, Austria’s improved sentiment indicators in the manufacturing sector, amid a significant fall in energy prices and easing supply chain problems, suggest that Austria will continue to enjoy a healthy economy.

Norway (#3): Norway rounds out the top 3 for the month of March. While the country has 1st ranked Risk and 4th ranked valuations, it is held back by poor Momentum (ranked 31st). Norway has the second lowest CDS after Switzerland and its currency, the Krone, is the most competitive in our universe.

Country Performance

Data as of 2.28.2023
Source: MSCI

Country Ranking Model

As of 2.28.2023

Disclosures: This information was produced by and the opinions expressed are those of Accuvest as of the date of writing and are subject to change. Any research is based on Accuvest proprietary research and analysis of global markets and investing. The information and/or analysis presented have been compiled or arrived at from sources believed to be reliable, however Accuvest does not make any representation as their accuracy or completeness and does not accept liability for any loss arising from the use hereof.  Some internally generated information may be considered theoretical in nature and is subject to inherent limitations associated therein.   Any sectors or allocations referenced may or may not be represented in portfolios of clients of Accuvest, and do not represent all of the securities purchased, sold or recommended for client accounts.

The reader should not assume that any investments in sectors and markets identified or described were or will be profitable. Investing entails risks, including possible loss of principal. The use of tools cannot guarantee performance. The charts depicted within this presentation are for illustrative purposes only and are not indicative of future performance. Past performance is no guarantee of future results. Actual results may vary based on an investor’s investment objectives and portfolio holdings. Investors may need to seek guidance from their legal and/or tax advisor before investing. The information provided may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different than that shown here. The information presented, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.