Convictions

Broaden the opportunity set in equities

Expand your view on equity markets and find attractive entry points across different segments

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For 2024, earnings growth should remain solid. In the US, +8% earnings per share (EPS) growth is anticipated, while in Europe, the overall growth is expected to reach +2% in 2024. In 2025, both areas should experience further earnings growth, at around mid-single digits.

With this positive view on earnings, can we consider equities as an attractive area? While the Fed put remains supportive, equity indices are already anticipating an improving economic outlook even though the scenario could evolve according to the US election outcomes.

We expect stocks to benefit from solid earnings growth, and believe the high concentration of US equity returns will normalise at some point. Thus, we maintain a selective approach and focus on US quality, value and global equities.

In Europe, we continue to favour value and quality as core positions. In addition, given their attractive valuations, small-cap stocks should benefit from an economic recovery and rate cuts by the European Central Bank.

In terms of sectors, our stance is balanced between cyclicals and defensives. Among the former, segments at the bottom of the trading range appear attractive, provided the PMIs continue to improve and the Fed maintains its put.

To conclude, the second half of the year should offer opportunities to equity investors. Geopolitical risks and US elections could lead to volatility which may provide attractive entry points.

Valuations diverging across equity markets Source: Amundi Investment Institute, Datastream. Data is as of 26 August 2024. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East. 0% 20% 40% 60% 80% 100% 5x 7x 9x 11x 13x 15x 17x 19x 21x 23x 25x 01/2019 07/2019 01/2020 07/2020 01/2021 07/2021 01/2022 07/2022 01/2023 07/2023 01/2024 07/2024 E / P d w f m 2 1 % of "Magnificent 7" market value - R.H. Scale PER - MSCI USA PER - MSCI USA ex Magnificent 7 PER - MSCI EAFE PER - MSCI EM Valuation Gap
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Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 27 September 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.

Date of first use: 27 September 2024
Doc ID: 3895158

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