Duncan Robertson

Market Outlook

Q3 Global SMID-Cap Outlook

Outlook

Latest Global SMID-Cap economic and market outlook. 


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We continue to be broadly positive on the outlook for global equities. The earnings picture remains strong and its principal driver, the AI data-centre capital expenditure cycle, appears intact. Seasonality should also become more favourable over the coming weeks. Nevertheless, we continue to monitor the risks from higher oil prices, inflation and global bond yields, all of which could weigh on risk appetite.

During September the team travelled to Taiwan and India, as well as attending the CLSA forum in Hong Kong. The trip to Taiwan confirmed the strong momentum in the AI data centre capex cycle, a theme to which we retain significant exposure, but where we have lately been taking some profit on valuation grounds.

We came away from the Indian trip with renewed conviction in the market and the sense that the only thing wrong with India is that it lacks exposure to the AI thematic. Bank credit growth has accelerated to 19% YoY. The Foreign Currency Non-Resident (Bank) investment scheme has been a resounding success – so much so that they closed it early – and the system is awash with liquidity. Property sales have picked up. Auto sales remain healthy with 4W sales up 22% YTD YoY and the various consumer companies that we saw faring well too. There are also signs of private sector capex picking up, especially in the power sector. Meanwhile, the government continues to be focused on manufacturing, increasing exports, and increasing domestically produced content in the manufacturing sector. We have added to our Indian weight by increasing our position in Lemon Tree Hotels.

From a thematic perspective, we have been adding to our defence exposure through Hanwha Aero; our wealth management theme through Pinnacle and Fineco Bank; and our healthy living theme through Vita Coco.   

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Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).

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