DAVOS, Switzerland, Jan 23 (Reuters) – Lower valuations, government support and loose fiscal policy set against a cyclical backdrop in China is encouraging investors to rotate into technology and diversify away from the U.S., UBS fund managers told Reuters this week in Davos, Switzerland.
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Haefele said clients in the U.S., Europe and Asia are seeking hedges against the dollar and growing confidence in China’s tech sector is encouraging them to invest more there.
While the U.S. still holds an advantage in computing power and infrastructure, researchers say China’s progress is driven by innovation under tight budgets.
Ulrike Hoffmann-Buchardi, Americas CIO and head of global equities at UBS, sees a broader cyclical backdrop as the main driver of markets. Fiscal stimulus will lift all regions, creating opportunities in markets that are trading at more attractive valuations, she said.
“We are optimistic, but also cognizant of downside risks, in particular in those countries and areas where capital has gone; (the) U.S. of course has been a big recipient of those inflows,” Hoffmann-Buchardi added.
“With tech earnings expected to grow over two times the growth rate of the S&P 500, I still think the U.S. is going to be the leader,” Saira Malik, chief investment officer of U.S. asset manager Nuveen, told Reuters GMF this week.
“As long as inflation remains somewhat benign and the employment markets are slowing, that opens the door to a couple of rate cuts … in the second-half of this year,” she said.
Reporting by Divya Chowdhury in Davos and Mehnaz Yasmin in Bengaluru; Editing by Alexander Smith
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