For a while now, the U.S. has been the best economy and the best market to be in, and it has been easy for people to make a case for asking “why are we investing internationally?”
Jennifer Martin, vice president for global equities at T. Rowe Price has an answer. She is looking for international opportunity even at a point where the domestic American market has been so strong and her outlook does not call for a U.S. recession. She outlined her reasoning on a recent episode of my Money Life podcast.
“I believe 75 % of the world’s market cap is now U.S. So from a global manager standpoint, that gives us a really interesting opportunity to find these exceptional companies around the world. And it’s funny, I just did a client meeting where they were asking me ‘Why would we own any technology companies domiciled outside the U.S.?'”
“When I think of mission-critical linchpin technology companies, look no further than ASML in the Netherlands, which is a global company, selling to global companies around the world. Or TSMC based in Taiwan. So there’s some exceptional companies domiciled outside of the U.S. and, interestingly, the market doesn’t care about them. Like you see that in their valuation.”
“And so, I think you definitely want to participate responsibly in the U.S. markets but, as a global manager, we’re really energized to find some of these opportunities,” she said.
It’s not just individual companies, either, but global regions that present opportunity, Martin believes.
“When we talk to CEOs around the world, we say, ‘Where do you want to spend that incremental dollar?’ A lot of them say Southeast Asia. And these are economies like Indonesia, the Philippines, India, where there’s just incredible demographic trends that support it,” she noted.
“So I agree, for the last decade, U.S. exceptionalism has dominated the markets. But I would just say it’s wonderful to have that opportunity set. Again, the energy of a lot of my teams is to be carefully contrarian, and this might be a great time because if you can find that company that has good fundamentals, and you’ve got the valuation support, you’ll get paid twice,” she said.
Among sectors to look at, Martin likes health care, financials and artificial intelligence tech plays, although with AI the opportunities are becoming more complicated to sort out. Energy is another sector that could continue to do well, especially if China continues to try to stimulate its economy.
For more of Martin’s investment insights, listen to the full podcast
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