UBS Global Wealth Management has downgraded its outlook on Indian equities to a neutral rating, signaling caution amid evolving economic and market conditions.
UBS Global Wealth Management has downgraded European equities to a neutral rating and also lowered its stance on Euro zone equities to neutral. At the same time, it has upgraded Swiss equities to an attractive rating and raised the European health care sector to an attractive rating.
UBS downgraded weighting on US equities
UBS had cut its recommended allocation to US equities to neutral, last month, as the world’s biggest stock market risks lagging behind while growth accelerates elsewhere, Reuters reported.
In a note, strategists Andrew Garthwaite and Marc el Koussa cited reasons such as the relatively lower sensitivity of U.S. corporate earnings to global growth, high valuations, the trend of funds diversifying outside of the United States and downside risks to the dollar, among other things.
“The US has the lowest operational leverage of any major region and thus historically underperforms if global growth accelerates to be above 3.5 per cent,” they said. UBS forecasts global GDP to come in at 3.4 per cent in 2026, according to Reuters.
US investors have been pulling money from the world’s largest stock market, as waning Big Tech returns and chaos over domestic policymaking leaves them searching for alternatives. Weakness in the dollar – which last year clocked its worst annual performance since 2017 – has been another push factor, as per Reuters.
“From our marketing in North America, it seems unambiguous that funds will go global,” said the strategists. “ETF flows show diversification is happening.”
Still the U.S. market is so large that even a benchmark allocation would remain a hefty one, with U.S. stocks comprising more than 70 per cent of the MSCI World Index of global stocks. (With Agency Inputs)
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
