Investing, the big undervalued value segments
Investments
Posted by MoneyController on 19.07.2023
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The current economic and market conditions seem to favour large segments of 'value' stocks, as some experts from Franklin Mutual Series (Katrina Dudley, Investment Strategist and Mandana Hormozi, Mandana Hormozi, Tim Rankin and Todd Ostrow, Portfolio Managers & Research Analysts) write in their analysis (published on the 'Lamiafinanza.it' portal).
The experts at Franklin Mutual Series believe that the end of the era of near-zero interest rates may favour value companies in certain regions, such as Europe and Japan. There are at least two reasons for this. The first is that value companies tend to outperform growth companies in a rising rate environment (value companies are less dependent on financing). The second is that international markets are not as efficient as those in the US and can therefore lag in pricing securities.
However, value stocks also have other strengths. Firstly, the Franklin Mutual Series experts argue that current valuations are below historical averages. Second, value stocks also offer exposure to emerging markets and Asia. Thirdly, the asset class can benefit from substantial government funding aimed at reducing value and supply chain risks by moving production within or closer to national borders (reshoring).
European and Japanese value stocks, the Franklin Mutual Series experts continue, represent internationally relevant companies in key product and manufacturing segments: automotive components, consumer goods, banking, pharmaceuticals and luxury goods.
As the Franklin Mutual Series experts explain, these strengths and a likely undervaluation from a price perspective can create opportunities. In particular, they say, opportunities could arise where more in-depth analysis picks up on elements that markets have not priced in.
See also:
Hard to do without equities for long-term returns
Uncertainty in the markets leads investors to seek resilient assets