What do falling profits mean for markets?

clock • 4 min read

Julian Howard, investment director in GAM's Multi-Asset Class Solutions team, analyses the implications of elevated equity valuations and falling earnings for investors

Corporate profits of listed companies around the world are declining after nearly two decades of growth relative to total output. This is of particular concern for equity investors as valuations are elevated following several years of price gains without corresponding increases in earnings. Globalisation, low corporate taxation, low financing costs and a 'winner takes all' sector concentration in areas such as IT have created a halcyon era of profitability. However, this era is under severe threat due to fundamental challenges in the form of increasing competition and labour costs. We...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Multi-asset

Multi-asset investors divided over equity outlook seek value in fixed income

Multi-asset investors divided over equity outlook seek value in fixed income

Opportunities in US TIPS and high yield

Maria Nicholls
clock 11 July 2025 • 3 min read
Multi-asset teams show caution in Q2

Multi-asset teams show caution in Q2

Positive sentiment for Europe

Paul Ilott
clock 19 June 2025 • 5 min read
Scopic Multi-Asset Review: Orbis Global Balanced Fund

Scopic Multi-Asset Review: Orbis Global Balanced Fund

Performance review of multi-asset funds

Paul Ilott
clock 02 April 2025 • 8 min read
Trustpilot