Diamond Hill International Strategy Q4 2024 Market Commentary

2025-03-13 20:45:00 ET

Summary

• Global equity markets faced significant challenges in Q4 2024, with Europe and Asia Pacific ex-Japan experiencing notable declines due to political and economic instability.
• Our portfolio performed in line with benchmarks, driven by strong stock selection in health care and communication services, but hindered by underperformance in industrials and IT sectors.
• New positions in Prosus NV, MAX Co., and Krones were added for their undervaluation and long-term growth potential, while Swatch and Bolsa Mexicana de Valores were exited.
• Despite global uncertainties, Japan and India present compelling investment opportunities due to corporate governance improvements and dynamic growth environments, respectively.

Market Commentary

Global equity markets faced headwinds in the fourth quarter, as the MSCI ACWI ex-USA Index fell by 7.6%. European markets bore the brunt of the decline, dropping 9.7%. Rising energy costs, weakening industrial output and escalating political instability created a challenging backdrop. Germany’s automotive sector continued to cede ground to competition from Chinese electric vehicle manufacturers. At the same time, a no-confidence vote in France that toppled the government raised fears of fiscal tightening and potential tax increases. Adding to Europe’s woes, the prospect of US tariffs on European exports amplified geopolitical and economic vulnerabilities....

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