Large performance differences in equities

The equity year 2022 was characterised by large performance differences and slightly increased volatility. Last year, mid-cap and technology equities had to give up some of their substantial gains from previous years. We see good recovery potential for these equities in the short term, as the start of 2023 already shows.

The trading year 2022 was a difficult year for equities and characterised by large differences in performance, both geographically and between the individual sectors. These differences often amounted to more than 10% and occurred not only in a global comparison but even within individual countries.

In the USA, for example, the Nasdaq Index, which focuses on high-growth securities, performed much worse than the standard S&P 500 Index. In Germany, mid-cap stocks (MDAX) had to give up larger parts of their substantial gains from previous years in contrast to stocks in the DAX, which focuses on large-cap companies. The chart below clearly shows the performance differences of the two examples mentioned.

We expect the performance differences shown to reverse in the long term and see good short-term recovery potential in these equities/indices, as the start of 2023 already shows.

Currently, the medium-term outlook for equities is still good, as the very poor investor sentiment ensures further recovery. Moreover, equity markets are pricing in a recession at current levels, despite the economy bottoming out.

We see the longer-term outlook for equities as neutral, as no attractive level has yet been reached in a trend analysis (following chart). Equity valuation levels currently show strong differences globally and have not yet reached attractive levels everywhere (last chart "Valuations with strong regional differences"). The low valuation level of Europe and emerging markets helps here, limiting the risk of further corrections. We are positioned accordingly.

Also read our latest situation assessment for Q1 2023.

Disclaimer - legal notice

This publication was produced by the Investment Office of the Colin&Cie Group. The information and opinions contained in this document are based on sources we believe to be reliable. However, we cannot guarantee the reliability, completeness or correctness of these sources. All information and quoted rates are only up-to-date at the time of this publication and are subject to change at any time without notice. The content is based on numerous assumptions made by the Colin & Cie Group. It should be noted that different assumptions can lead to materially different results. The forecasts and assessments are only current at the time this publication is prepared and can change at any time without prior notice. Past performance of an investment is not a guarantee of future results. Certain investments can experience sudden and substantial losses in value. This information and views do not constitute a solicitation, offer or recommendation to buy or sell investment instruments or to carry out any other transactions. We recommend interested investors to consult their personal advisor before making decisions on the basis of this document so that personal investment goals, financial situation, individual needs and risk profile as well as further information can be duly taken into account as part of a comprehensive consultation. The information contained in this publication is marketing material that is distributed for advertising purposes only.