Market Quote: Red Sea Crisis, Japan’s Reforms, Europe’s Conference Season
Author: The editor's desk
January 19, 2024
Members of AGF’s Investment Management Team weigh in on the week that was in global financial markets.
Seeing Red
Houthi attacks on cargo ships in the Red Sea are resulting in shipping delays that are poised to disrupt supply chains for several months. The longer these disruptions persist, the more significant the repercussions on costs and margins for companies could be, while potentially serving as yet another catalyst for the trend of nearshoring.
Rallying Like It’s 1990
Japan’s Nikkei 225 Index continues to rally higher after climbing above 34,000 earlier this month for the first time since March 1990. The country’s stock market has been one of the best performing of any in the world over the past year and could benefit further if Japan’s economy continues to emerge from three decades of stagnation and corporate reforms to rectify decades of inattention to shareholder returns continue.
In fact, to that end, the Tokyo Stock Exchange released earlier this week its first monthly list of companies that have disclosed plans to maximize their capital management and enhance investor returns.
Wall of Worry
It is conference season in Europe with investors flocking to meet companies and size up their prospects for the year ahead. In terms of guidance, in general, corporations are non-committal, which is understandable given the high level of uncertainty resulting from, among other things, the ongoing war in Ukraine, weak economic growth, labour inflation and upcoming elections around the world.
Still, those concerns are not much more to worry about than what investors in Europe faced this time last year. Indeed, the MSCI Europe Index rallied 20.6% (in U.S. dollars) in 2023 despite the energy crisis – as well as rising interest rates and rampant inflation – being potential drags on performance.
So, yes, it is a tough environment overall, but valuations remain generally attractive in Europe and near historic lows relative to U.S. equities. This could potentially bode well for many European stocks, especially those with strong balance sheets and solid cash flow generation.
For full bios, please visit our contributor’s page.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of January 16, 2024 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.
This document may contain forward-looking information that reflects our current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein.
For Canadian investors: Commissions, trailing commissions, management fees and expenses all may be associated with investment fund investments. Please read the prospectus before investing. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The term AGF Investments may refer to one or more of these subsidiaries or to all of them jointly. This term is used for convenience and does not precisely describe any of the separate companies, each of which manages its own affairs. AGF Investments entities only provide investment advisory services or offers investment funds in the jurisdiction where such firm, individuals and/or product is registered or authorized to provide such services.
® ™ The “AGF” logo and all associated trademarks are registered trademarks or trademarks of AGF Management Limited and used under licence.
RO:20240119-3336244
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
Headquartered in Toronto, Canada, AGF has investment operations and client servicing teams on the ground in North America and Europe. AGF serves more than 800,000 investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.
For further information, please visit AGF.com.
© 2025 AGF Management Limited. All rights reserved.
