Summary

1. Remain overweight global equities. The overall backdrop still supports equities as global growth is solid and financial conditions are supportive.

2. Stay Neutral US equities – With valuations already at elevated levels, we see no room for a further multiple expansion. We keep our preference for sectors with a solid outlook for earnings growth, and which could benefit either from the AI CAPEX boom or AI utilization. Non-USD denominated investors might consider FX-hedged exposure.

3. Stay Neutral  EU equities - Earnings growth expectations might be too optimistic, and European equities are likely to remain a tale of two fates as FX headwinds should reoccur. We see little room for a further valuation re-rating. We prefer domestically geared sectors, benefitting from efforts to increase the European autonomy.

4. Stay Overweight EM equities - The prospect of steady economic growth, lower rates, and a softer dollar is a favorable backdrop for EM equities in general and Asian equities in particular.  China (Tech) remains a key conviction as the perception about China stocks among international investors is changing from “uninvestable” to “unneglectable”.

5. Stay overweight Japan: The new government reduces political uncertainty and sets a moderately more growth-oriented policy stance as the relationship with the US is enhancing.

6. No change to our sector views: The earnings season is progressing “as usual” with solid beats in the US and a more mixed picture in Europe.