Displaying items by tag: international
Based on research published by Mattison Public Relations in London, more than half of the companies in the FTSE 100 now have board-level ESG committees. The data was compiled by reviewing the latest annual reports from all 100 companies. While the overall percentage was 54% of FTSE 100 companies, the research showed that the percentage varied by industry. For instance, 100% of oil, gas, and mining companies had board-level ESG committees, while only 13% of the non-bank financial services sector had these committees. Companies in the non-bank financial services sector include insurers, asset managers, and retail investment platforms. Within the 54%, 56% were made up entirely of non-executive directors. This would allow those companies to add directors with ESG expertise to provide greater oversight of the companies' ESG performance.
Finsum:Based on recent research, 54 companies in the FTSE 100 now have board-level ESG committees to evaluate a company’s ESG performance.
Inflation may be peaking, or at least that is what Treasury bulls are thinking. A rally started at the 20-year note and worked its way to shorter term rates this week: the 30-year yield fell 13 basis points and the ten-year yield fell by 12 basis points. Declining yields were driven by investors flooding into these treasury markets. Still, investors are pricing in a half-point rate increase by the Fed in the next two meetings with an almost 100% chance of reading the tea leaves in the options markets. The rally was really suppressed by Bank of America’s Forecast which said inflation peaked in March and will be on the decline. Similar patterns took place on the long end of the government bond market in the Euro areas as well with Germany and the U.K. seeing their yields fall.
Finsum: The flood in the TIPS market suggests that bond investors still see some persistent inflation in the near term.
JP Morgan put out an interesting recommendation to investors recently. They said the best place to make money in the recovery might not be in the US, but rather in international stocks. According to Gabriela Santos, global market strategist at JP Morgan Asset Management, “When you have a cyclical recovery like we expect in 2021, it’s really international’s time to shine … We think it’s really important for investors to have a balance between U.S. equity exposure and international exposure as we go into the year of the vaccine for 2021”. The key argument here is that international indexes are more dominated by cyclical stocks than tech, and those are the share poised to really gain as the vaccine plays out.
FINSUM: This is all pretty basic. International indexes have not recovered as much as US stocks, and are composed of companies that are likely to start outperforming at this stage of the recovery. Europe in particular seems to be a good bet.
US market valuations are eye-watering. By several measures the S&P 500 is as richly valued as it has ever been. With that in mind, overseas stocks, especially in Europe, appear to be a good bet. For example, while US stocks are now well ahead of their pre-COVID peaks, the Stoxx Europe 600 is still down 9.2% since its high in February. Since March, the S&P 500 has rebounded by 60% while the Stoxx Europe 600 has only seen a 40% rise.
FINSUM: So European benchmarks are more exposed to the banks and industrials, which were more hurt by COVID than US tech companies, which dominate American benchmarks. That said, now that a vaccine is in site, there is a big chance for appreciation in Europe that seems much less likely to occur in the US.
American investors tend to be focused on US stocks, which over the last several years has been very fortunate. However, there are potentially great discounts to be had overseas. Barron’s has just picked five overseas bargain equities, borrowing from fund manager Dodge & Cox. According to the CIO of Dodge & Cox, “There’s very strong secular growth in some regions outside the U.S. … If you want to participate, you need to own local-market stocks”. The picks are Itau Unibanco Holdings (Brazil), South African media company Naspers, and French drug company Sanofi. They also like DISH Network and Google at home.
FINSUM: So there are obviously great bargains to be had overseas, but we think it takes a real focus to understand the dynamics integral to picking shares in such different markets. Funds that specialize in doing so seem like a good idea.