Are you invested in International or Emerging Markets? Should you be?

Our CIO was briefly in Lisbon, Portugal, and asked about our stance on the market. We are neutral on international and emerging markets but that may change. Our attention is on central banks and the Euro.

Do you know what most consider the primary equity benchmark for Portugal?

It is the PSI 20 which tracks the performance of the 20 largest market cap companies in the Euronext Lisbon Stock Exchange. As of 6/24/2024, it is -0.09% YTD and 10.67% in the last 12 months. Galp Energia is responsible for 45% of the breakeven YTD performance.

How about the most popularized European Equity Benchmark?

We look at a handful but the Euro Stoxx 50 is the leading blue-chip index with 50 stocks across 11 Eurozone countries. It is up over 6.17% YTD and 14.22% in the past 12 months. UCG Unicredit is responsible for 51.7% of the positive YTD numbers.

BUT… These numbers are currency-adjusted to the USD. If we were to use the local currency, the Euro, the returns would be up a difference of roughly 3% across the board. The Euro has weakened against the Dollar and created a correction and discount opportunity in what is actually a strong-performing market year-over-year.

What happens next?

We do not time the market and we strive to preserve our client’s capital as much as we try to grow it. From a strategy perspective, we are net buyers on Eurozone & Domestic Equities. We see the capitulation argument as overcooked and ultimately like the effects we expect to see caused by a sliding Euro.

Disclaimer: Past performance is not indicative of future results. This is not a recommendation nor is it investment guidance. Please consult your financial advisor on any suitability, goals, and objectives.