Global stock markets rallied in 2019, defying political and macroeconomic uncertainty. Will investors be as fortunate in 2020? Since many risks remain, maintaining style diversity and finding investing themes that are detached from volatility drivers will be important ingredients for equity allocations.

Investors will look back on 2019 as a curious year for stocks. After a sharp correction at the end of 2018, the MSCI World Index went on to rally by 27% in local-currency terms. But looking at 2019 in isolation is misleading. In fact, stocks have been clawing their way back from the 2018 downturn. The MSCI World only exceeded its September 2018 peak in the second half of 2019 (Display, left).

In developed markets, US large-cap stocks led the global gains (Display above, right). While emerging markets were relatively weak, Chinese stocks—perhaps surprisingly—surged through the constant rumbling of trade war tensions. Cyclical stocks fueled the global rally (Display below, left). And growth stocks led the markets once again throughout most of 2019 (Display below, right), though there were brief signs of a value recovery in the third quarter.