Market Musings 180922:
Which sectors and themes are resisting the best?

Hunting for sectors, regions, and themes that could be the next market leaders.

Summary:

  1. Energy, focusing on solar energy and battery metals such as lithium, are emerging as a clear market leader
  2. The value + dividend investment styles are clearly beating growth
  3. In the US, mid-cap stocks are beating large-caps
  4. In Europe, Eurozone banks are starting to resist well and offer tempting yields
  5. Global listed infrastructure ETFs continue to perform well, with their exposure to infrastructure assets in Energy, Utilities, and Transportation sectors and their bias to North America (and US dollar assets).


Video + Article for this week:
September update of our 2022 Investment Themes

  • Theme 1: Responding to today’s energy crisis
  • Theme 2: Securing the bare necessities of life
  • Theme 3: hunting for quality income

Hunting for resistant segments in a falling stock market

This week did not spare the stock market bulls, with global stock markets hurt by continued worries over painfully elevated US inflation rates.

The US S&P 500 benchmark index ended the week at -17% for 2022 to date, while the MSCI World index (in GBP) eased back to -6% and the UK FTSE 100 -4% for the year to date. Bond and corporate credit markets fared equally poorly, with cash the place to be in the very short term.

Despite this setback, there are still segments of the global stock market that look interesting.

In looking for the potential next market leading segments to focus on once financial markets turn up, one should focus on those segments of the stock market that are already holding up better. These tend then to be the sectors, themes or regions that then go on to outperform in an eventual market recovery.

What are some of these segments that we should focus on at present?

1. Energy sectors - Solar energy, Lithium producers, Uranium

Energy is an obvious place to start, given the current energy crisis and the strong performance to date of the global Oil & Gas sector. Aside from OIl & Gas, I have noticed that solar energy stocks have started to perform well even in the current difficult market context.

Since mid-May, the TAN Invesco Solar ETF has soared 48% while the S&P 500 has lost 1%. This makes sense, given the expected acceleration of both European and global investment in…

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