Access stocks of developed and emerging market countries.
Ramiz Chelat seeks opportunities in e-commerce, industrials, med-tech, athleisure, cruise lines, and the SaaS (software as a service) space.
The definition of quality has not changed, but as industries consolidate and secular themes evolve over time, investors can find quality in different areas of the market today than in the past.
As valuations rise, investors should question a company’s longer-term growth outlook. For instance, the shift to subscription-like, high cash flow business models in the SaaS space can provide high visibility in the long run. And when sectors become undervalued, investors can react. Concerns around universal healthcare in the US, particularly during an election year, can provide opportunities in the med tech space and managed care.
The trade conflict will remain critical and continue to be an overhang on the markets. The thornier issues, such as IP violations and access for U.S. companies into China via joint ventures, will be more difficult to resolve. This will limit moving to a phase two or phase three deal.
Fiscal stimulus in the U.S. and China is limited. The US fiscal deficit is quite high due to the tax cuts and the budget expansion from 2018. And China’s ability to stimulate is more limited now, particularly given concerns around its monetary expansion in 2016. Overall, debt levels are still very high in China. Given this framework, growth is expected to remain low relative to what it has been in the past.