Issue link: https://maltatoday.uberflip.com/i/1481619
5.12.19 12 OPINION 13.10.2022 Shaun Frendo Shaun Frendo is a Research Analyst at Calamatta Cuschieri Equity investors may seek shelter in defensive sectors I nvestors who are heavily invested in equities may be willing to seek a cer- tain degree of safety, such as exposure to essential consumer goods, which are generally regarded as less volatile in the current market conditions. e third-quarter earnings season, which will kick in later this week, has the eye of several US banks and inves- tors at large. e fears related to this earnings season are many. With grow- ing geo-political uncertainty, signs of economic fragility, and the strong possibility of weaker earnings, the cur- rent market predicament seems under- standably tense. To provide some context to the sit- uation, the trajectory for earnings growth for the S&P 500 in the most recent quarter could mark the lowest earnings growth rate reported by the index since the third quarter of 2020. Estimates for the third quarter have fallen significantly from more than 11 per cent at their peak in June. e bear market we have had so far this year has been the trigger for con- cerns among investors who have re- cently seen major losses in their port- folios. e situation for buy-side investors seems to be negative in the short term whilst not excluding long-term recov- ery, improvement, and growth. Lower valuation multiples do not nec- essarily imply that equities are trading cheaply, however. e possibility of a correction is also not to be excluded at this point. Regardless, there are still those who believe that it is a good time to buy, given where valuations stand at the moment. at said, investors may place greater importance on certain areas over others. For the time being, the market may reflect clear hesitation with regards to riskier investments and some investors might avoid riskier sectors altogether. e sectors that remain the most at- tractive for equity investors are those that provide a degree of safety due to their underlying inelasticity, such as those related to essential consumer goods and healthcare. Healthcare in particular may prove to be a good example since it only ac- counts for 8.6% percent of total US GDP when compared to other sectors, such as real estate and finance, which together account for 22.3% according to data from statista.com. is tells us two things: aside from the fact that people collectively tend to spend more on non-essential services than they do on necessary ones, the sector itself might still have potential to grow steadily in the long term. In conclusion, while equities are not the most favorable investment in the current market environment, there may still be hope for bullish investors as they tread carefully through these volatile markets in days of uncertainty. e article is issued by Calamatta Cuschieri Investment Services Ltd, which is licensed to conduct investment services business under the Investments Services Act by the MFSA and is also registered as a Tied Insurance Intermediary under the Insurance Distribution Act 2018. For more information visit https:// cc.com.mt/. e information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. There are still those who believe that it is a good time to buy, given where valuations stand at the moment. That said, investors may place greater importance on certain areas over others