Aberdeen, BlackRock make case for US assets on tax cuts, earnings power
Investors caution against shorting the US dollar despite its steep decline versus major currencies this year amid the de-dollarisation move.
US assets will remain a key allocation for global money managers like Aberdeen Investments and BlackRock even as investors seek portfolio diversification by loading up on defensive sectors in Europe, China and Japan amid tariff and inflation challenges, strategists said.
Tax incentives handed out by the US government could drive corporate earnings to another level, particularly among smaller companies. Tech companies have also stepped up hiring talent to overcome challenges from China in the global race for leadership in artificial intelligence, they added.
“The profitability of listed companies in the [US] market is still good,” said Zhang Dongyue, Asia-Pacific head of multi-asset and investment solutions specialists at Aberdeen. “Although the market has fluctuated greatly this year, some industries including consumer goods, medical care, energy, and recently technology have recovered.”
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He also cautioned investors not to bet against the US dollar despite its recent weakness.
The S&P 500 handed investors 6.8 per cent returns this year en route its record on July 3, according to Bloomberg data, while global stocks gained 10.2 per cent. This year, the US dollar has lost 10.6 per cent against its major peers, according to the DXY Index, as investors trimmed dollar-based assets. The S&P 500 rose 5.3 per cent during Trump’s first presidential term.