International equities have emerged as a promising investment opportunity after a decade of underperformance compared to the U.S. stock market. Shifting macro conditions and concerns about U.S. market concentration are prompting investors to reconsider their lack of international exposure in portfolios.
For years, U.S.-based investors favored domestic markets due to weak international returns, particularly in mega-cap technology stocks. However, recent gains in international equities have outperformed the U.S. stock market by roughly 15%, marking a significant turnaround in performance.
A weakening U.S. dollar has boosted returns for dollar-based investors holding foreign assets, while metals like gold and silver have surged as investors seek safe havens. Emerging markets have seen strong returns, with the iShares MSCI Emerging Markets ETF up 42% over the past year.
Improved fundamentals in countries like Japan and Europe, along with deregulation efforts, are driving renewed interest in international stocks. European banking stocks, in particular, are seen as attractive dividend plays due to central bank policies and regulatory changes.
Latin American markets, driven by rising commodity demand, are also performing well. Brazil, Chile, and Peru are examples of countries benefiting from strong commodity prices and shifting political dynamics.
Market strategists believe that international-themed trades will continue to benefit from global policies and trade deals, providing long-term opportunities for investors. The balance between U.S. and overseas holdings, especially in technology, is being reassessed as international equities gain momentum. Investors are turning to South Korea for exposure to the booming memory chip market, with Samsung and SK Hynix dominating the country’s stock market. The iShares MSCI South Korea ETF has surged 125% in the past year. Apple’s struggle to secure enough chips for iPhone demand further highlights the strength of the memory trade.
Other major chip players like ASML and Taiwan Semi are based outside the U.S., along with numerous data center opportunities overseas. The renewed focus on international equities signifies a shift in investment strategies, driven by valuation gaps, earnings growth, and the evolving global economy. According to Seymour, these are global trades, not just U.S. trades.
Read more at CNBC
1. Apple announces new iPhone 13 with faster processor, improved camera, and longer battery life. Prices start at $699 for the mini and $1,099 for the Pro Max.
2. Unemployment rate falls to 5.2% in August, with 235,000 jobs added. Despite positive numbers, concerns remain about the impact of the Delta variant on the economy.
3. Pfizer seeks FDA approval for COVID-19 booster shot, citing waning immunity over time. The company argues that a third dose will enhance protection against the virus.: Miss foreign stock run in 2025? Still market money to be made overseas