From Europe’s prospects to digitalisation and sustainability, experts predicted trends shaping the equities investment landscape in 2024.
Highlighting the influence of microeconomic factors in public equity markets, Luke Barrs, global head of fundamental equity client portfolio management at Goldman Sachs Asset Management, pointed out the current market dispersion across and within sectors, necessitating “a disciplined, fundamental approach to stock selection focused on quality and profitability”.
“Companies aligning with corporate and government efforts to boost the security of supply chains and resources, as well as national security, will emerge as long-term winners,” said Barrs. “We favour firms with pricing power, durable business models and strong balance sheets.”
According to Barrs, public equity markets offer opportunities for targeted exposure to established semiconductor manufacturers, industrial automation, and technology firms aiding manufacturing reshoring. Expecting increased demand for natural gas products and reliable, clean energy solutions as nations pursue affordable and sustainable energy, Barrs added that the escalating volume and sophistication of security threats create opportunities for cybersecurity platforms and aerospace and defence technology providers.
Sustainability-related investments would define key themes for equities in 2024, predicted Silvia Merler, head of ESG & policy research at Algebris Investments. These include energy transition, sectors connected to electrification or battery and storage, circular economy and recycling, health care and education, digitalisation, cybersecurity, data centre and data management and reshoring, highlighted Merler.
Europe is “cheap on a historical basis” and home to global companies exposed to important secular growth opportunities such as demand for computing power and semiconductors, the clean energy transition, biotechnology, consumer affluence and luxury products, according to Jupiter Asset Management. “We target companies positioned to benefit from enduring secular trends like digitalisation, computing demand, onshoring amid geopolitical tensions, the green economy and healthcare innovation, with identified opportunities scattered throughout the European market.”
The firm highlighted how the Biden administration’s efforts to shift technology production to the US, coupled with the Inflation Reduction Act’s support for green technology, are benefiting manufacturers in the semiconductor supply chain, including various European firms.
“European equity benchmarks have a larger exposure to global sales than US companies, which tend to be more domestically focused, and our funds tend to have even more exposure to global revenues than our indices,” it added.
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