Overweight US, China and Japan Equities, JPMorgan's Sheng Says

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00:00It seems like investors are still leaning towards risk right now, despite that we're in this kind of vacuum when it comes to U.S. data.

00:07Is that the right sort of call?

00:09So I think overall, if you look at the global backdrop, we still expect global growth to be pretty solid.

00:14We actually think next year we see global growth going back to trend and also the policy environment pretty supportive, right?

00:20Easy monetary as well as fiscal policy.

00:23So we do agree with our pro-risk stance.

00:26In terms of JSA vacuum, I think probably short-lived.

00:30Obviously, it depends on how long kind of the both parties will take to come back to the negotiation table.

00:36But we don't think the impact on markets or the economy would be too significant.

00:39Yeah, I mean, so far it's been a non-event.

00:41I mean, if you didn't follow the news, you wouldn't know it's actually happening, the fact that there's a shutdown ongoing.

00:48So you mentioned your overweight risk still, overweight equities.

00:51Is that almost purely, like, what within equities right now should we be paying attention to?

00:56So we actually overweight equities across a number of markets.

01:01So in the U.S., obviously, the overall valuation we talked about is a bit high.

01:05But we still believe in tech.

01:06And also we like financials as a quality cyclical exposure.

01:10And we also like Japan and Chinese equities globally as well.

01:15How do you look at this whole AI trade here right now, right?

01:17Because we're talking about valuations.

01:19And certainly they're not demanding in China compared to the U.S. per se.

01:23But a lot of these services have yet to go mainstream.

01:25We're talking about we're not seeing that impact on earnings so far.

01:28So how should we be looking at this rally now in AI?

01:31So I think actually if you look at the U.S. market, a very interesting point is if you look at the mega tech companies,

01:38their valuation compared to history actually is not that demanding.

01:40But the rest of the market is actually more expensive.

01:43So actually from a relative perspective, I think there's probably still more room for them to go.

01:48Clearly, earnings will be important.

01:50Carioide talked about that.

01:51We need that to come through.

01:53ROI really is a key driver here that we really need to see that.