Louis Krauskopf
NEW YORK (Reuters) – Global stock markets are becoming increasingly concentrated, with an increasing weight in U.S. and technology stocks, and while not necessarily unwarranted, some diversification is needed, Goldman Sachs strategists say. There is a possibility that it will happen.
Goldman strategists led by Peter Oppenheimer said in a note on Monday that since the global financial crisis, the U.S. stock market has outperformed other major regions, accounting for 50% of the global stock market. Ta.
Goldman cited relatively strong earnings growth in the U.S. stock market and greater exposure to fast-growth industries and less exposure to slow-growth companies as key factors for the outperformance. ing.
“While we like the U.S. market and believe its relative growth is based on strong fundamentals, we also believe greater geographic diversification is justified,” Goldman strategists said in a note. ” he said.
The strategists noted that Japan offers the best diversification among other developed markets. Among emerging markets, strategists point to India and China, the latter of which they see as a “value opportunity.”
Goldman said the increased prominence of technology, particularly in the U.S. and Asian markets, reflects the sector's revenue growth.
“While global technology profits have soared since the financial crisis, there has been virtually no progress across other sectors,” the strategists said.
Goldman said the tech sector's dominance is not unprecedented, with roughly the same weight as the energy sector in the 1950s.
Strategists said there is an over-emphasis on technology in all regions, but there are good opportunities to hedge against the technology advantage. This included favoring the health sector as an area with “relatively low cost and high growth potential” in most regions.
Another potential diversification opportunity is Europe's GRANOLAS, which are among the top 11 European STOXX600 stocks and lower than the US mega-cap “Magnificent 7”, according to Goldman. The company is trading at a high valuation and is “reinvesting at high interest rates.” Double your profits over time. ”
(Reporting by Louis Krauskopf; Editing by Jonathan Oatis)
