Mark Haefele

As we believe major world stock markets can gain in the near term from falling rates, positive global growth and China’s stimulus efforts, we have upgraded global equities from neutral to attractive. Furthermore, the US is among our preferred markets and we target 6,600 on the S&P 500 by end-2025, and have moved US equities from neutral to attractive as well. 

With a period of uncertainty ahead, we have moved the US dollar to neutral (from unattractive). But while the dollar may stay well bid in the near term, we believe its valuation could now be stretched. 

We have also upgraded high grade government bonds to attractive (from neutral) following the recent rise in yields.

We have three key convictions.

‍Position for lower rates: Cash returns are set to diminish in light of further central bank rate cuts. Meanwhile, investment grade bonds offer attractive yields and potential for capital gains, with total expected returns in the mid-single-digit range in USD.

Transformational innovation opportunities: AI and power and resources constitute two opportunities within equities with the potential to provide significant and sustained profit growth, that could earn investors in these areas outsized long-term returns.

Time for real estate: The outlook for residential and commercial real estate investments is bright. With constrained supply and rising demand, there are opportunities in sectors including logistics, data centres and multi-family housing.

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