LIVE MARKETS Will 2022 be value's year?

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WILL 2022 BE VALUE'S YEAR? (0900 EST/1400 GMT)

As of the end of 2021, the S&P 500 Growth index (.IGX) has outperformed the S&P 500 Value index (.IVX) for five-straight years:

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Using Refinitiv data back to 1995, that tied the 2007-2011 period for the longest stretch of growth outperforming value. However, on a rolling five-year basis, this recent streak has been more pronounced, with the IGX/IVX ratio rising 78% into 2021 vs a 36% gain into 2011.

Although, the ratio rose last year, there was a sharp deceleration vs 2020, which was growth's best-year ever vs. value. The ratio surged about 34% in 2020, just slightly exceeding a year-2000 jump of about 33%. In 2021, it posted a rise of just over 7%.

And growth stumbled sharply vs value into 2021's year-end. In December, the ratio suffered its biggest monthly percentage fall since February.

Meanwhile, the growth vs value battle still looks to hinge on action in tech (.SPLRCT) vs financials (.SPSY). Late last year, tech accounted for around 56% of the SPDR S&P 500 Growth ETF's (SPYG.P) weighting. At 23%, financials were the biggest exposure for the SPDR Value ETF (SPYV.P).

After going parabolic, the S&P tech sector, on a monthly basis, peaked vs. the financial sector in August 2020. The tech/financials ratio then turned down sharply:


Unless, that tech/financials ratio's August 2020 high is overwhelmed, the recent recovery off the May 2021 trough can still prove to be a counter-trend bounce. If so, and tech resumes its decline vs financials, 2022 may well be the year growth ends its yearly winning streak vs value.

(Terence Gabriel)



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Terence Gabriel is a Reuters market analyst. The views expressed are his own

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