'Dividends,' 'China,' 'Inflation' And More: AI Reveals What Worried Investors Are Searching For In Troubled Times

The economy is navigating through uncertain times and this uncertainty has seeped down into all sectors of the economy. Corporate profit growth has been no exception and has suffered due to slowing demand and rising costs.

What Happened: Investors, unsurprisingly, were a lot concerned about several things as companies reported their calendar year fourth-quarter results. Financial data provider FactSet compiled a list of the most popular search terms in its document search app, which is AI-powered.

Here are the most searched terms the firm listed:

1. Dividends: Dividends are assured returns irrespective of the economic conditions and corporate fundamentals. If the company has a dividend policy, it usually continues to pay dividends or some also go about increasing payouts. Only under extreme conditions, when the going gets tough, do companies decide to cut back on dividends or suspend these fixed payments altogether.

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It, therefore, comes as no surprise that investors were interested in dividends. Investors searched for companies that increased dividend payouts and also those that cut back on their payouts amid potential signs of volatility in 2023, FactSet said.

2. China: Investors’ interest in China is understandable, given that the country serves as the manufacturing base of many high-profile big tech companies. More importantly, the country is also a big consumer of goods and services.

Apple Inc.’s AAPL production exposure to China is over 50% and the tech giant derived about 20% of its December quarter revenue from the Greater China region, which also includes Macau, Hong Kong and Taiwan.

When COVID-19 disrupted manufacturing in China, companies, including Apple and electric vehicle maker Tesla Inc. TSLA saw their production undercut targets.

3. Inflation: Inflation has been front and center for market participants as it has been the premise behind the Fed’s relentless interest rate hikes. While higher inflation eats into the real income of wage earners and, in turn, impacts their spending, higher interest rates have put strains on companies due to the higher cost of funding.

4. M&A: With the market sell-off seen in 2022 rendering valuations extremely attractive for even high-growth names, analysts have flagged the likelihood of more consolidation, especially in the tech sector. M&A activity dwindled through 2022, with the second half of the year seeing 50% fewer deals relative to the same period last year, FactSet said.

5. ESG: ESG evinced interest amid the renewed focus of global regulators on fund names amid the spread of ESG marketing practices, the report said. EU ESG regulation, supply chain issues, the war in Ukraine, record heat waves in Europe and anti-ESG rhetoric all led to increased search interest in ESG, it added.

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