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The Opportunities and Risks as the World Continues to Re-open: Our 4Q Global Outlook

As the COVID-19 pandemic recedes worldwide and the recovery cycle gains traction, the Calamos Global Equity Team continues to find a wide range of opportunities supported by strong fundamentals, accelerated disruption and emerging leadership themes. The team’s forecast on the global markets and the positioning of the Calamos global and international portfolios can be found in the just-published 4Q Outlook Navigating Shifting Crosscurrents.

“In our strategies that seek lower-volatility global equity participation (i.e., those that invest in equities and convertible securities), we remain focused on providing investors with positive skew,” write Nick Niziolek, CFA, Co-CIO, Senior Co-Portfolio Manager, Dennis Cogan, CFA, SVP, Senior Co-Portfolio Manager, Paul Ryndak, CFA, SVP, Head of International Research, and Kyle Ruge, CFA, AVP, Senior Strategy Analyst. “We seek to mitigate exposure to a larger equity correction, while maintaining sufficient upside to continue participating in the global recovery.”

At the start of the fourth quarter, the positioning is similar to where it was midyear. The team is maintaining a barbell approach, pairing cyclicals and Covid-reopening exposure with secular growers. Within cyclical exposure, the focus is on industries with pricing power and those that are benefiting from global supply shortages.

The Outlook includes comments on:

  • United States. The team’s positioning in the US reflects the expectation that growth will continue to be strong but moderating, framed by a balance of reflationary and disinflationary forces.

    “Given the greater near-term uncertainty around monetary policy and inflationary and growth dynamics, we would not be surprised to see increased volatility and internal rotations in the quarters ahead, driven by growing market concerns that growth will slow more severely,” the team writes.
  • Europe. Recent macroeconomic crosscurrents (manufacturing supply shortages, rising energy import prices, and the potential for incremental economic slowdown in China, a major export market for Europe) have resulted in some churn in the European market. But the team is encouraged by the dramatic improvement in Europe’s vaccination rollout and economic activity across Europe is moving back to pre-Covid levels.

    “We continue to have an optimistic medium term view on Europe. The current market rebound since the Covid-bottom is tracking similarly to past market rallies, and Europe’s equity market remains more reasonably valued on the whole versus other developed market equities,” they write.

    The team also commented on small caps, whose year-to-date outperformance has reflected successful leveraging of investment into technological capabilities, infrastructure and education in Europe. Exposure to small caps in payments, ecommerce and IT software has been boosted across the portfolios.
  • Japan. Attractive fundamentals, such as increasing margins, provide compelling opportunities in Japan, and the team is investing selectively, while acknowledging the significant macro headwinds. Companies that are globally competitive and can benefit from improvements in global growth and the capital investment cycle are being emphasized.
  • Emerging markets. “The real pain in emerging markets has been primarily self-inflicted by China,” writes the team, attributing the correction in Chinese equity markets to tighter regulatory and monetary conditions. While China is down -16.6% year to date, emerging markets outside China are up 9.2% as measured by the MSCI Emerging Markets ex-China Index. “Given China’s heavy weighting across emerging market benchmarks and its contribution to Asian economic growth, emerging market equities have been broadly weaker this year,” says the team.

    However, the team expresses optimism for a rebound in China—"Because much of the pain has been self-inflicted, the solution can be self-administered.” It’s highly likely the Chinese Communist Party (CCP) shifts its tone toward a more accommodative fiscal and monetary stance to support economic growth heading into the December politburo meetings, according to the team.

    The Outlook comments on a breadth of opportunity beyond China. This includes India whose equity market is up 26.8% through 9/30 and had a strong third quarter. What’s more, the team says, “Several ASEAN markets hit hard by the Delta variant may experience recovery trajectories similar to India’s, with the potential to improve sentiment for the broad emerging market asset class. In particular, Indonesia, Thailand, and the Philippines have announced plans to remove Covid-related restrictions, and we anticipate other countries will follow.”

Read the Outlook in its entirety here. For additional thought leadership, please see the Calamos global team’s blog posts or contact your Investment Consultant at 888-571-2567 or

Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. The views and strategies described may not be appropriate for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.

As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to the potential for greater economic and political instability.

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