- Our preference for Value has not changed despite market gyrations in recent months. We believe the macro backdrop, wide valuation discount gap, and relative fundamental strength to Growth should sustain the Value run.
- The macro backdrop and risk of a persistently aggressive Fed should support Value stocks’ performance. The Value factor has the tendency to outperform Growth during periods of elevated inflation and rate hikes.
- Earnings estimates continue to swing in favour of Value stocks. Value stocks have enjoyed consistent earnings upgrade throughout the year unlike Growth stocks which are facing accelerating earnings downgrades.
- Value continues to trade at a wide discount to Growth. The MSCI AC World Value index is still trading at a 50% discount to its Growth counterpart, below the historical average of 27% discount.
Chart 1: Value has been the more resilient play this year
Value stocks are catching up again
Chart 2: Underdog no more - Value has finally bucked the decade-old trend
Chart 3: Value have underperformed Growth from June to August, but things are reversing on a global level.
Value stocks remain firmly supported
Chart 4: Even if headline and core CPI show no growth month-on-month, inflation by year-end remains high
Chart 5: Value stocks have seen positive EPS revision, while Growth stocks were hit with the opposite

Chart 6: EPS momentum still in Value’s favour
Chart 7: Value continues to trade at a gapping discount to Growth
Strategies for your portfolio
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