Value has room to surprise further

THE race is on. Governments, institutions and researchers are running around the clock to secure a vaccine for Covid-19. To date, there are more than 50 vaccines, with some already authorised for use for selected countries. For the world, securing a vaccine is a matter of time. The reopening of global economies, by extension, is a function of vaccine availability.

By then, much of the world could already be back to normal. Economic normalisation is a reality that some market participants are pricing in. The Russell 2000 Index - which tracks the performance of the smallest 2000 companies in the US - ended November with a month-on-month gain of 18 per cent. It is the best performance ever recorded since the 1980s.

The Russell 2000 Index is not alone in this. Other notable indices - the Nikkei 225 Index, STI Index, Stoxx 600 Index - all ended November with monthly gains in excess of 14 per cent, outperforming the large cap US indices by a significant margin. Historically, the outperformance of typically cyclical and value-oriented markets is a good indication of what is to come. It is a vote of confidence by market participants who believe the rate of change in global growth is likely to tick higher.