Devan Kaloo had a stark message for clients he visited in Spain last week: put your money into stock markets anywhere, “just not the US.”
“If you believe as I do that the US economy is going to slow down and the dollar’s going to be weaker, you need to start thinking about investing in other places,” Kaloo, global head of equities for British fund manager abrdn Plc, said in an interview Thursday in Madrid. “I really don’t mind whether it’s emerging markets or Europe or Japan. There is a relatively compelling story to talk about in all of these areas.”
Kaloo sees opportunities elsewhere around the world, but says the recent selloff in US bonds makes equities there look expensive. While analysts are forecasting faster earnings growth for American companies than their European peers, US stocks have already outperformed those in Europe and Asia so far this year. They have been boosted by a rally in technology shares, with the tech-heavy Nasdaq 100 up 33%.
“My view is that the US economy will suffer the consequences of higher yields with a significant slowdown,” he said, predicting that conditions which have supported a strong dollar and the US equity market will get a lot weaker. Next year will be tougher because “companies will feel the costs of refinancing debt and excess savings in households are being removed.”
In Europe, Kaloo sees great companies that are very cheap, with headwinds abating, supporting an “optimistic view” on equities for 2024. He sees China stabilizing, with recovery on its way, and views emerging markets as an opportunity. Abrdn has about $90 billion in assets in both developed and emerging-market stocks.
Citigroup Inc. strategist Beata Manthey shares Kaloo’s view that European stocks are more attractive than the US as relative valuations are still near a record low.
--With assistance from Sagarika Jaisinghani.
Author: Macarena Muñoz
