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洞见 07.03.2024

UBP House View - March 2024

UBP House View - March 2024

As the earnings season ends, US tech companies have exhibited robust results, propelling the Nasdaq Composite to a record high. The Bank maintains its convictions on US and Japanese equities while favouring India over China for emerging market growth exposure. We tactically increased our position on gold on the back of central bank demand and geopolitical uncertainties.

Key takeaways

Economic expansion

Global growth looks set to reach 3% in 2024, remaining resilient thanks, in part, to a stronger contribution from the US.


We tactically increased our exposure to gold, believing in the strength of its fundamentals.


US tech companies have demonstrated strong results, beating earnings expectations. With a preference for cloud computing, software and AI-related names, they remain our strongest convictions, as do Japanese equities. We have slightly increased our exposure to emerging markets through India, as the country offers the most attractive investment case in the long term.


Is it still wise to hold US technology stocks?

As earnings season comes to an end, US tech companies have demonstrated strong results, beating earnings expectations and propelling the Nasdaq Composite higher by 6.18% since the beginning of the year.

As valuations soar and the Nasdaq Composite hit an all-time record, investors may wonder if tech companies still represent worthwhile investments.

Given their anticipated 16% increase in earnings per share for 2024 (rising from 9% in 2023), the remarkable performance of the sector appears justified. Additionally, earnings per share are higher than those in other segments of the market. Coupled with a resilient US economic backdrop, these dynamics support our decision for a substantial allocation to US tech names, with a preference for cloud computing, software and AI-related stocks.

Meanwhile, in Asia, Japan, which has remained one of our strongest convictions since November, has now reached its highest level since 1989 after an unprecedentedly long recovery. We continue to hold a positive view on this market.

In emerging markets, we favour the Indian market over that of China, which is encountering uncertainties and economic headwinds. Furthermore, India is more likely to redistribute value to shareholders, making it a compelling alternative for investors seeking exposure to emerging market growth.

Last, we increased our position on gold, firmly believing in the strength of its fundamentals. The continued demand from central banks, coupled with geopolitical uncertainties, is expected to drive the value of the yellow metal upwards.



Near-term headwinds, medium-term tailwinds

Since mid-2023, various tailwinds have been driving global equities higher. Yet, as February unfolded, some of these driving forces began to fade, temporarily, we expect, creating a more challenging landscape for investors as we move through spring.

To begin with, the re-rating of US equity valuations relative to bond yields on the back of positive real interest rates seems complete. This adjustment has contributed to almost 40% of the total returns since mid-2023.

Currently, US equities’ earnings yields (the inverse of the price-earnings ratio) are trading in line with US 10-year yields. This alignment was prevalent prior to the quantitative easing cycle that spanned from 2008 to 2021 and the era of negative real interest rates. The valuation adjustment that started with the Federal Reserve’s rate-hiking cycle in March 2022 should end the re-rating of US equities relative to US bond yields and leave investors focused on earnings recovery to drive the next leg of the market’s ascent.

Furthermore, the liquidity boost that has driven US and global equities up from their October lows might see a drain of as much as USD 100 billion as we move into March 2024. This shift would represent the first temporary challenge for the markets since late summer 2023, when investors faced a 10% market correction within the broader context of a bull market. By June, however, investors should expect the liquidity tailwind to return as we move into the November 2024 US elections.

Moreover, while the industrial rebound we noted in October 2023 is materialising, the nearly 25% rally from the S&P 500’s October lows surpasses any 6-month rally during a bottoming in the industrial cycle since 1971, with the exception of the rally following the 1982 US recession. This suggests that the initial surprise effect of the rebound is already reflected in equity market prices.

Encouragingly, the approaching close to a robust earnings season, alongside the unfolding of an expected industrial rebound, indicates that further earnings upgrades could be on the horizon later in 2024. The catalyst for these earnings upgrades, we expect, will be the start of the US rate-cutting cycle (which we expect to begin over the summer), underpinning a wider recovery in the economy and earnings in the second semester. Despite the near-term headwinds mentioned above, we are maintaining our strategic stance on US equities relative to global equities given the premium earnings growth offered relative to the rest of the world.

For more detailed insight, download the full UBP House View.
Michaël Lok Michaël Lok
Group CIO and Co-CEO Asset Management

Global equities

Invest in companies with superior and sustainable value creation.


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