Investment Monthly: Solid fundamentals support US equities despite election uncertainty

Key takeaways

US equities continue to surprise on the upside despite election uncertainty, supported by solid economic and earnings growth data, Fed rate cuts, and long-term structural trends. These factors should bode well for IT, communications, industrials, financials and healthcare, although some may benefit more or less from the election outcome. We prefer investment grade with 5-7 year maturities, where yield levels remain attractive.

We prefer UK over Eurozone stocks due to the UK’s more favourable macro outlook, a lack of trade deficit with the US and heightened geopolitical risks. Moreover, UK equities tend to be more defensive in nature and remain cheap, supporting our overweight stance, but we also see opportunities in European IT, energy and healthcare.

While we are waiting for more clarity around the size and the specific details of China’s fiscal stimulus measures, the potential for increased US tariffs adds to the complexity, so we remain neutral on mainland Chinese and Hong Kong stocks. Yet, valuations remain cheap. Within the region, we are more bullish in Japan, India, South Korea and Singapore due to their favourable market conditions and positive growth drivers.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/2024-11/

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Publish Date: Fri, 01 Nov 2024, 07:05 AM

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