Growth under pressure: This is how investors react to the new market trend!

Growth under pressure: This is how investors react to the new market trend!

Growth-oriented investors are currently faced with a dynamic market environment characterized by changing economic conditions. How e-fundresearch reports, the performance of quality and growth stocks lags behind the value sector despite global growth. In the third quarter of 2025, listed stocks showed a consistently positive development, with developed markets increasing by 7.4% overall, with Japan standing out with +8.3% and Canada with +10.6%.

US stocks also rebounded, rising over 8%. Surprisingly, small caps were able to keep up with large caps for the first time in several years. Countries such as China, Taiwan and South Africa also achieved notable growth: China grew by 20.9%, Taiwan by 14.1% and South Africa by 10.7%. Particularly impressive is the rise in Chinese stocks, which have risen over 42% since the beginning of the year, largely attributed to the biotechnology and artificial intelligence sectors.

Market analysis and growth strategies

Growth in recent months has had a significant impact on the earnings of many companies in the MSCI Value Index, which evaluates stocks based on price-to-book ratio, price-to-earnings ratio and dividend yield. The index shows that almost a third of the price of value consists of financial stocks. The economic conditions therefore have a direct influence on the performance of value stocks. Observations show that monthly lists of capital optimization companies have been published on the Tokyo Stock Exchange since January 2024, indicating that companies are actively improving their capital allocation and migrating to higher-growth markets.

Loud M&G Expectations of future earnings growth rates for US stocks have settled at a high level. The high valuations, particularly for companies like NVIDIA, Microsoft and Alphabet, indicate optimistic market expectations. Despite the dominance of these companies, it is crucial to be selective when selecting U.S. growth stocks as not all valuations are justified. The risk of a pullback remains in overvalued stocks that fail to achieve winner status.

Value strategies in Europe

In Europe, however, value stocks show lower expectations for future earnings growth. Nevertheless, cheaply valued value stocks can generate positive returns even with modest growth. Since January 1, 2022, the value segment in Europe has cumulatively increased in value by around 30%, while European growth stocks only recorded an increase of around 1% over the same period.

The discussion about investment strategies continues to be dominated by the dilemma of whether investors should focus on growth or value. In recent years, growth, particularly in technology investing, has seen a significant resurgence, while value investing has been popularized by figures such as Benjamin Graham and Warren Buffet. However, with the current trend reversal and the rise in interest rates, value investing is becoming more attractive again, so investors who prefer regular dividends should gravitate towards value stocks.

Long-term investors who are willing to take on more risk, however, might do better with growth stocks. It remains to be seen which strategy will prove more advantageous in the coming years, but a diversified portfolio should help mitigate price fluctuations and promote balanced overall performance.