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November 2024 / VIDEO

The outlook for international equities amid the shifting market environment

The rate-cutting environment will be particularly beneficial for ex-US markets

Justin Thomson, Head of International Equity and CIO

Key Insights

  • After an extended period of underperformance for international equities vs the US, many investors are heavily-indexed to the latter.
  • International value stocks should benefit from surging nontech CAPEX, while lower interest rates should favour international small caps
  • The UK looks attractive if the Labour government delivers on its business-friendly overtures, while the medium-term bull case for Japan still holds

Statements are made based on data of various indices as follows:

Ex US vs. US performance and valuations – Based on MSCI ACWI ex-US Index and the MSCI USA Index respectively

Global value vs. growth valuaions – Based on MSCI ACWI Value Index and MSCI ACWI Growth Index respectively

Global small caps vs. large caps valuation – Based on MSCI ACWI ex-US Small and Mid Cap Index and MSCI ACWI ex-US Index respectively

Japan performance – Based on the MSCI Japan Index.

T. Rowe Price cautions that economic estimates and forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual outcomes could differ materially from those anticipated in estimates and forward-looking statements, and future results could differ materially from historical performance. The information presented herein is shown for illustrative, informational purposes only. Any historical data used as a basis for analysis are based on information gathered by T. Rowe Price and from third-party sources and have not been verified. Forecasts are based on subjective estimates about market environments that may never occur.

Risks: International investments can be riskier than U.S. investments due to the adverse effects of currencty exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. These risks are generally greater for investments in emerging markets. The value approach to investing carries the risk that market will not recognize a security’s intrinsic value for a long time or that a stock judged to be undervalued may actually be appropriately prices. Small-cap stocks have generally been more volatile in price than the large-cap stocks.

Important Information

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

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Justin Thomson

Head of International Equity and CIO

Justin Thomson is the head of International Equity. Justin is a member of the Management Committee and the chairman of the International Equity Steering Committee. He is a member of the Asset Allocation and ESG Committees. He also is the chief investment officer for International Equities. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.