Fidelity International: End of Rate Hike Cycle, Short-Term Bullish on US Stocks
Fidelity International Asia ex Japan Investment Strategy Director Jian Liheng believes that the US interest rate hike cycle seems to be coming to an end, but the pace of inflation decline is limited. It is difficult to cut interest rates in the short term, and it is expected that government bond yields will remain relatively high for a long time. In addition, the sustained high inflation has tightened US financial liquidity and made funding tight, which may lead to another increase in policy interest rates. He believes that an immediate recession is not necessarily imminent, but there are still related risks until next year. He said that US stocks have seen an upward trend in the first half of the year, driven by the artificial intelligence theme of technology and internet stocks.
Fidelity International's Director of Investment Strategy for Asia (excluding Japan), Jian Liheng, believes that the US interest rate hike cycle appears to be coming to an end. However, the pace of inflation decline is limited, making it difficult to cut interest rates in the short term. It is expected that government bond yields will remain relatively high for a long time. In addition, the sustained high inflation has tightened US financial liquidity and made funding scarce. This may lead to another increase in policy interest rates. He believes that an immediate recession is not necessarily imminent, but there are still related risks until next year.
He stated that the US stock market has seen an upward trend in the first half of the year, driven by the artificial intelligence theme of technology and internet stocks. In the short term, the ample market liquidity and tight labor market can support further gains. Therefore, he holds a relatively optimistic view on US stocks in the short term and gives a short-term investment rating of "hold". However, in the medium to long term, he prefers the Asia-Pacific region, mainly because there are fewer negative factors, which provides more investment opportunities.
He mentioned that the market is looking forward to the mainland Chinese government implementing stimulus policies to boost the economy. However, he expects that the chances of large-scale easing policies being introduced are slim. Instead, policies targeting retail consumption may be implemented, mainly because they are less affected by external factors. He pointed out that household savings in the mainland are still increasing, reflecting the ongoing recovery in overseas travel and overseas investment consumption, coupled with low housing intentions. Therefore, he believes that this provides room for the mainland government to implement strong policies.
As for the Hong Kong stock market, he believes that the valuation is still attractive. The easing of Sino-US relations and the introduction of positive policies in the mainland are both positive catalysts.