‘Value unlock’ propelling equities to new highs

Read this week’s ‘to the point’ below

Global equities rallied strongly over the past few days buoyed by a Joe Biden win in the US election and the announcement of an effective Covid-19 vaccine by Pfizer. The easing of risks rocketed the MSCI World Price Index to an all-time high following a gain of close to 9% during the first few days of November. The reaction by the market is somewhat not surprising considering that a large portion of global equities at the end of October, shown on the graph modelled by the 27four Quants team below, were in the value category.

 

Whether the prevailing momentum will be sustained is a toss of a coin. We are already starting to see a pull-back as Covid-19 infections in Europe and US continue to rise. Donald Trump’s refusal to concede defeat is also causing jitters among investors.

The bottom-line: should there be a clear path to economic recovery, we could see global equites exploding given the current bias towards value.