Tech Giants to Drive US Stocks Higher Under Trump Presidency
The US stock market is poised to continue its outperformance this year, driven by the financial muscle of big tech firms and investor-friendly policies under a second Donald Trump presidency. This is according to Yie-Hsin Hung, CEO of State Street Global Advisors (SSGA), one of the world’s largest asset managers with $4.7 trillion under management.
US Exceptionalism to Continue
Some investors believe Trump’s agenda of tax cuts and deregulation can further fuel US exceptionalism, which saw US stocks widen their valuation gap over rivals last year. Despite potential disruption from policies such as higher tariffs and concerns that the market is in bubble territory, big technology firms are expected to continue driving up US stock indexes.
Investment Budgets to Fuel Growth
These tech giants have large investment budgets, which will enable them to continue innovating and growing. “The advent of new technologies such as AI and quantum computing has led to significant earnings adjustments, suggesting that US exceptionalism has a good chance of continuing,” Hung explained.
Preparing for Volatility
While SSGA believes Trump’s policies will be generally constructive for investors, the company is preparing for a fair amount of volatility. As a result, it is offering investors a range of options, including a new exchange-traded fund (ETF) that provides European investors with access to Saudi government bonds.
Saudi Arabia’s Economic Diversification
The ETF, which will be partly listed on the London Stock Exchange, has attracted significant interest from overseas investors seeking to tap into Saudi Arabia’s drive to diversify its economy away from oil. The country’s sovereign wealth Public Investment Fund will invest $200 million in the ETF.
ESG Considerations
When it comes to environmental, social, and governance (ESG) issues, SSGA engages with clients but ultimately leaves the investment decisions up to them. “We subscribe to the notion of providing choice to our clients,” Hung said. Saudi Arabia has faced criticism over its human rights record, but the country denies accusations of human rights abuses and says it protects its national security through its laws.
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