16 Mar , 2021 By : kanchan Joshi
Value stocks have outperformed growth stocks so far this calendar year. The MSCI World Value index has given returns of 9% in 2021 so far, while the MSCI World Growth index is lagging with nearly 1% returns, showed Bloomberg data.
Analysts at domestic brokerage house ICICI Securities Ltd point to an array of favourable factors, which are aiding the performance of value stocks. In a report dated 15 March, they said, value rotation continues as US equities hit all-time high on subdued inflation, steady growth and global central banks pledging an accommodative stance.
Value stocks are those which investors find undervalued relative to their earnings and growth potential. Growth stocks, as the name suggests, are those which are expected to grow faster than the market average.
However, Saira Malik, chief investment officer and head of equities at Nuveen Asset Management sees opportunity in beaten down growth stocks.
"Growth stocks have sold off this year as US Treasury yields have risen. This makes logical sense, as a higher discount rate results in a lower valuation for long duration growth stocks. But it is likely a one-time adjustment that has already happened. Many growth stocks have already fallen between 15% to 20%," she said
"We think this could represent an attractive entry point, as we expect Treasury yields could pause given that the Fed should remain on hold and non-U.S. bond yields are even further depressed," she said in her blog on 15 March.
Meanwhile, the US Federal Reserve, Bank of Japan and Bank of England are scheduled to meet this week. Global central banks are expected to maintain a status quo on rates. heir commentary will be keenly watched by investors.
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