Lazard Global Factor Report

October defied its ominous history as the global equity markets posted another positive month, sending the major indices up roughly 20% for the year. Positive developments on China/US trade negotiations, a Federal Reserve interest rate cut, and corporate earnings that have largely exceeded expectations contributed to investor optimism. Asian markets led during the month largely on hopes for progress on trade. Japan saw a large jump in consumer spending in advance of an increase in the country’s value added tax and was the strongest market in the month. Overall, economic growth continued to show signs of slowing, with business investment sowing the sharpest decline. Currency movements were pronounced as the UK pound rose sharply against the US dollar on expectations of a Brexit deal after the upcoming December election. Emerging markets also rallied sharply on the trade prospects, stability in commodity prices, and lower interest rates. They have now outperformed developed markets over the past year.

Health care stocks rallied on strong earnings and the resolution of several lawsuits over the oxycodone crisis. Information technology stocks also posted a strong month and remain the best performing sector for the year. Energy stocks, despite firming of oil prices, sold off and, along with consumer staples, were the only sectors in negative territory for the month. Factor performance was broadly muted in the month, with risk providing the largest source of discrimination as investors embraced a “risk on” month. Sentiment indicators continued to detract as the sell-off in momentum stocks continued for a second month in developed markets. Sentiment in emerging markets continues to work well. Value measures were generally muted except in Japan where they provided meaningful return and detracted in the emerging markets. Small cap stocks also provided modest discrimination in the month.

The preceding is an excerpt from our monthly Factor Report. Read the full paper.


This document reflects the views of Lazard Asset Management LLC or its affiliates (“Lazard”) based upon information believed to be reliable as of the publication date. There is no guarantee that any forecast or opinion will be realized. This document is provided by Lazard Asset Management LLC or its affiliates (“Lazard”) for informational purposes only. Nothing herein constitutes investment advice or a recommendation relating to any security, commodity, derivative, investment management service or investment product. Investments in securities, derivatives and commodities involve risk, will fluctuate in price, and may result in losses. Certain assets held in Lazard’s investment portfolios, in particular alternative investment portfolios, can involve high degrees of risk and volatility when compared to other assets. Similarly, certain assets held in Lazard’s investment portfolios may trade in less liquid or efficient markets, which can affect investment performance. Past performance does not guarantee future results. The views expressed herein are subject to change, and may differ from the views of other Lazard investment professionals.

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Equity securities will fluctuate in price; the value of your investment will thus fluctuate, and this may result in a loss. Securities in certain non-domestic countries may be less liquid, more volatile, and less subject to governmental supervision than in one’s home market. The values of these securities may be affected by changes in currency rates, application of a country’s specific tax laws, changes in government administration, and economic and monetary policy. Small- and mid-capitalization stocks may be subject to higher degrees of risk, their earnings may be less predictable, their prices more volatile, and their liquidity less than that of large-capitalization or more established companies’ securities. Emerging market securities carry special risks, such as less developed or less efficient trading markets, a lack of company information, and differing auditing and legal standards. The securities markets of emerging market countries can be extremely volatile; performance can also be influenced by political, social, and economic factors affecting companies in emerging market countries.

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