Growth Equity

Growth, inflation, and rate risk drive sector returns and fundamentals, but macro’s explanatory power is at multi-decade lows. Long/short industry-group baskets show the equity market has turned pessimistic about growth, a potential opportunity as the macro data firm. The market’s inflation view has climbed, a move that may be harder to fade given rising oil prices. 

We are turning more constructive on Chinese internet stocks after several years of caution. We recommend going long offshore internet equities in absolute terms and upgrading MSCI China to overweight in a global equity portfolio.