| 23 February - 1 March 2026 |
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Three contrarian investing ideas for a changing market
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This weekâs insights include: |
- Real estate resets are nearing a turn: Office fundamentals are stabilising as leasing improves and vacancy growth slows, pointing to a potential inflection in a deeply discounted asset class.
- The small-cap cycle may be turning: Valuation gaps, falling-rate expectations, and improving credit conditions are creating a more supportive backdrop for smaller companies globally.
- AI leadership is going global: Chinese tech firms combine accelerating AI investment with policy support and lower multiples, offering a different angle on the AI trade.
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This week's Market Insights article is a 6 minute read! |
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Until recently, the winning strategy was clear: buy and hold tech. Over the last decade, no other sector has earned the top performing spot as often as this one. Today, this trend is in question. On a YTD basis, tech is not even in the top five best performing sectors. Sure, mean reversion could take hold and put tech back in the lead. But forward-thinking investors are considering new allocations that could benefit if a reversal doesnât happen. Today, weâll take a look at areas investors have ignored that could present serious growth moving forward. |
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| "When views are truly contrarian, they are inevitably uncomfortable." |
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Hereâs a quick summary of whatâs been going on: |
- US eases Venezuelan oil sales to Cuba amid regional pressure.
- Netflix walks away from Warner Bros bid as Paramount wins.
- Amazon overtakes Walmart as annual revenue leader.
- Block slashes workforce by nearly half as shares jump 24%.
- Nvidia beats on earnings as data center revenue surges 75%.
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Where are unseen investing opportunities hiding? |
In many ways, the market is upside down. Tech, once the darling of Wall Street, is less favored as concerns over CapEx grow. Meanwhile, asset-heavy sectors like materials, industrials, and utilities are on the upswing. Here are three sectors we've found to have the potential to outperform this year. |
- Office REITs: Is the worst finally behind them?: After years of pain, U.S. office REITs are starting to show early signs of stabilization. Leasing activity is picking up and vacancy rates may be close to peaking. With many names still trading at depressed valuations, some even below book value, select high-quality assets in strong submarkets could offer upside if earnings begin to recover this year.
- Small Caps: Cheap for a reason or just cheap?: Large caps look stretched at ~23x earnings, while small caps trade closer to historical norms around 15-16x, yet investors continue pulling money out. That disconnect may not last. Falling rate expectations, supportive credit conditions, and tax changes that favor smaller businesses create a backdrop where small caps could quietly outperform â especially outside the U.S. where valuations sit below long-term averages.
- Chinese Tech: A different way to play AI: While U.S. tech grapples with heavy AI CapEx scrutiny, Chinese tech firms are pairing AI growth with lower valuations and supportive policy. Earnings growth expectations for MSCI China remain solid and Beijing appears more investor-friendly than in recent years. Risks remain, but for investors seeking AI exposure without paying peak U.S. multiples, this could be an overlooked avenue.
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Join the discussion by leaving a comment! |
Weâve shared three contrarian ideas, but what would you add to the list? |
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Wednesday US Consumer Price Index (February) Forecast: 0.3%, Previous: 0.2%
Why it matters: Inflation remains the marketâs primary catalyst. Any upside surprise could delay expected rate cuts and pressure equities. |
Thursday ECB Policy Decision Forecast: 0.25% cut, Current: 4.00%
Why it matters: A rate cut would underscore Europeâs weaker growth backdrop and could weigh on the Euro while boosting regional equities. |
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