The Five Forces in International Equities to Monitor
(Fig. 1) Key themes shaping the direction of international markets
International investors appear to be underestimating five global trends that have the potential to shape the direction of markets. These areas of focus—China, Japan, technology, value, and the resiliency of international markets—may provide distinct opportunities as investors seek to shape portfolios in the wake of the coronavirus pandemic.
Investors Are Still Slow Off the Mark in China
The rapid rise of China to the world's second‑largest economy is widely observed. Yet, investors appear to underappreciate China's opportunity to continue expanding.
While China's share of global gross domestic product ballooned from 9% to 16% between 2010 and 2019,1 its expansion has not been matched in global equity indices. MSCI ACWI's China exposure, for example, expanded from 2% to just 5% over the same period. Gaining exposure to China by simply aligning to global indexes means investors risk missing out on much of the potential that this engine of global growth represents.
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