Fiera Capital - Institutional Markets Investment Outlook, Q3 2023

The report provides an outlook and portfolio strategy for the third quarter of 2023, with a focus on global equity markets. The report notes that equity markets have seen impressive gains in 2023, with the MSCI All Country World Index advancing over 6%. However, the rally has been narrow and driven by a handful of mega-cap technology stocks, with the S&P 500 leading the charge. The report also highlights the potential risks to equity markets, including hawkish central banks, a deteriorating economic backdrop, and expensive valuations. The report suggests that there is very limited scope for further multiple expansion as interest rates rise by more than markets generally expect. Furthermore, the expectation for an economic and earnings recession is expected to weigh on stocks in the coming year. The report recommends an underweight stance on equities over the tactical 12-18 month horizon. The report also notes that the outlook for economic growth has deteriorated, while both liquidity and credit conditions are tightening. As such, the report suggests that investors should resist the temptation to chase the rally and instead focus on fundamental analysis to identify sustainable investment opportunities.