Earnings Recession?
Jeroen Blokland | Jul 30, 2019 12:24
Lower global growth, caused mainly by lower exports due to trade uncertainties, are reflected in earnings. And especially in countries and regions that are hit hardest.
Earnings per share in emerging markets are down almost 9% compared to a year ago. Earnings growth of the MSCI All-Country World Equity Index has dropped to zero. Now, negative earnings growth is not necessarily a bad thing for equity markets – provided that investors see improvement on the horizon.
Given that a slight acceleration is expected in global GDP in the second half of this year, stronger earnings growth is possible. However, recent developments suggest this improvement could be shallow and vulnerable to new economic shocks. Proceed with caution.
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