Seizing the AI Liftoff, Riding the Fed Cuts
This year started with a lot of uncertainties surrounding tariffs, inflation and growing US debt. But the sharp market rebound has shown that investors nevertheless see a lot of opportunity. We agree and continue to see a constructive macro-outlook on the back of AI-led innovation, robust earnings and expectations of further Fed cuts.
The trade tariffs can increase costs, leading to a mild increase in US inflation, which may hit consumption as labour markets are weakening a bit. However, this headwind should be offset by re-onshoring and deregulation, which should support the US economy. The tech rally, buoyed by the AI trade, should remain a key tailwind for US equities, given that broader tech constitutes around 48 per cent of the S&P 500.
Since valuations can be a concern, we diversify into Chinese tech stocks, which are also supported by rapid innovation and favourable policies. Singapore market also provides equity opportunities, thanks to its defensive characteristics and high dividend yield. We maintain a neutral view on Eurozone and UK stocks, but have a preference for the EU periphery vs its core, as economic growth remains uncertain and we await for a sustainable acceleration.
In this video, Willem Sels, our Global CIO explains our investment strategy where we adopt a multi-asset approach and highlight our investment priorities and high conviction themes.