The Global Growth Cycle

What’s Driving Regional Performance? Tech vs Financials

We are seeing distinctly different opportunities and risks across 
the Americas, Europe, and Asia. Equity factors are diverging. 
Large-cap growth continues to lead in the U.S., while small- 
and mid-cap value is ahead in markets outside the U.S. This 
reflects two powerful forces:

• The AI-driven boom in the U.S., where technology (mostly
  growth) now accounts for over 35% of the benchmark
• The end of negative interest rates in Europe and Japan,
  where Financials (typically seen as value) make up nearly 
  25%. Yet we view many of our European and Asian 
  financial holdings not just as value plays, but as cheap 
  growth opportunities

More of the same, or something else?

Will this rare combination of a narrow U.S. bull market (led by mega-cap growth and a broad ex-U.S. rally (led by small/mid-cap value) last? Early signs suggest leadership may be shifting. Some year-to-date winners are stalling while some laggards are finding support. For example, we are identifying new opportunities in the previously beaten-up healthcare sector, where earnings and price momentum are turning positive thanks to new drug launches. In September, healthcare insiders became significant net buyers of their own shares for the first time in a very long time, marking their most active buying in more than a decade