Chart of the week
Since December 2021, cyclical stocks, known as value stocks (banks, energy, and automobiles in particular), have clearly outperformed growth stocks (mainly technology and luxury goods).
Since the end of 2021, the better performance of the value segment is mainly explained by the context of rising interest rates in fixed income markets. This phenomenon, linked to the return of inflation and the prospect of monetary tightening by the Fed, penalizes growth stocks, which benefited from the low interest rate environment in 2020 and 2021.
For the banking sector, which relies on credit margins and investment, the rise in interest rates is good news as it reduces the problem of low yields. Other factors directly benefit cyclical stocks. The prevalence of the less dangerous Omicron variant makes it possible to expect a return to normalcy favorable to the “traditional” sectors. The rise in oil and gas prices is benefiting the energy sector and the gradual resolution of shortages is opening up better prospects for the automotive sector, which was hurt last year by a lack of electronic parts.
It is worth noting that the relative performance of the value segment compared to growth stocks still has room for improvement, given the backlog accumulated over the past 15 years.
The following opinion was written on January 28, 2022 and is susceptible of changing.
*Sources : Bloomberg, and calculation from Lazard Frères Gestion
As of : January 28, 2022
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