Morgan Asset Management: Optimistic about dollar assets over gold, recommends an aggressive stock-bond ratio of 7:3
Morgan Asset Management's Chief Market Strategist for the Asia-Pacific region, Xu Changtai, stated that due to the strong dollar policy in the United States, dollar assets are expected to outperform gold, and he recommends a stock-bond ratio of up to 7:3. Although Trump's policies may stimulate inflation, Xu still predicts that the Federal Reserve will cut interest rates by 25 basis points this month, with a potential reduction of 1% next year. He holds a bearish outlook on the Hong Kong stock market's performance by the end of the year, believing that investors will remain cautious before Trump's return
According to the Zhitong Finance APP, Xu Changtai, Chief Market Strategist for JP Morgan Asset Management in the Asia-Pacific region, stated at a media luncheon that the strong dollar policy in the United States can attract capital inflows into the U.S. and reinforce the dollar's status as an international reserve currency. He indicated that, as the dollar is expected to remain strong, he is more optimistic about dollar assets than gold, and conservatively sees the stock-bond ratio maintaining at 60:40, which could later be adjusted to 65%:35% for a more aggressive stance, and if even more aggressive, stocks could account for 70% and bonds 30%.
Even though Trump's policies may stimulate a rebound in U.S. inflation, Xu still anticipates that the Federal Reserve could cut interest rates by 25 basis points in mid-month. As for market estimates, while the Fed is expected to only cut rates by 50 basis points next year, he predicts that the reduction could reach 100 basis points.
He mentioned that although U.S. presidential candidate Trump has expressed a desire for a weaker dollar to benefit U.S. exports, his policy direction, such as tax cuts and plans to increase tariffs, seems to stimulate inflation. Additionally, his recent warning on social media to "BRICS countries" not to challenge the dollar's status with other currencies indicates that he is actually pursuing a strong dollar policy.
Regarding the performance of Hong Kong stocks before the end of the year, he believes it will be mostly bearish, as investors will remain cautious about investing in Hong Kong and mainland stock markets before Trump takes office in mid-January. Furthermore, the upcoming Central Economic Work Conference next week may introduce policies, but it will take time to see results. He also believes that Hong Kong's foreign exchange reserves are sufficient, thus he is confident that the linked exchange rate system can continue to be maintained