After a challenging year in 2022 for global stock markets, the future seems brighter for equity investors with quality growth stocks looking particularly attractive. Portfolio Managers Laure Negiar and Zak Smerczak of Comgest’s Global Equity Investment Team discuss how their portfolio is well-positioned to capture the benefits of pricing power and sector trends that are currently driving growth.

With high inflation being compounded by the fastest rise in interest rates in nearly 40 years, capital markets have changed radically over the past year. Growth stocks have been particularly vulnerable as the market deteriorated. As a quality growth investor this has also hurt Comgest’s portfolios. Despite these headwinds, many of Comgest’s portfolio companies have been able to raise prices without a loss in demand or profitability, thus shielding shareholders from inflation.

Comgest has been investing in China for over 20 years, and the long-term promise of Chinese growth seems destined to be tempered with the price of high volatility. Geopolitical risks, an underdeveloped regulatory market and the ongoing cycles of Covid-related lockdowns have all led to waves of volatility that can lash investors. In our view, Comgest's disciplined stock-picking approach can help investors navigate the choppy waters of the Chinese market.

As Japan lifts Covid restrictions later than in the West, Richard Kaye, Japanese Equity Portfolio Manager & Analyst, believes investors can look forward to a strong recovery in 2022. In his view, the Comgest Growth Japan Fund is well-positioned to benefit from the reopening of Japan’s economy. In particular, he expects several holdings to see their profitability boosted in the near-term and beyond.