U.S. Funds will be Transferred to Raw Materials Financial Stocks

U.S. Treasury bond interest rates soared to a new high of 1.75%, dragging down U.S. stocks. UBS believes that under the catalysis of fiscal stimulus measures and vaccination, bond yields may rise to 2%. For stocks such as raw materials, it is recommended to allocate financial, energy and other related stocks on dips.

UBS pointed out that the rise in U.S. Treasury yields is mainly driven by economic recovery and inflation expectations. In the Asian market, consumer and producer prices are expected to return to pre-epidemic levels, and major central banks in the world still have no intention to close. Tight monetary policy is expected to be very unlikely to raise interest rates this year, which will benefit the performance of risky assets.

The slowdown of the epidemic has also allowed the market to recover the demand for raw materials. It is expected that producer prices can rise to 3% to 5% within this year. Once the long-term suppressed consumption power is released, the service industry prices are expected to continue to be higher than the epidemic Before the level.

Under the premise of economic recovery, UBS expects that the earnings growth of global value stocks this year is expected to surpass that of growth stocks by about 15 to 20 percentage points, of which the earnings growth of Asian growth and value stocks can reach 30%.

From the perspective of corporate fundamentals, last year’s financial report was better than expected, and corporate profit margins have returned to pre-epidemic levels, and this year is expected to rise further. Therefore, the adjustment of earnings per share for next year will be adjusted from the original US$175 and US$195 to 182. US dollars and 205 US dollars, the earnings growth reached 28% and 13% respectively.

UBS believes that although U.S. Treasury yields continue to rise, the stock risk premium is still higher than the long-term average, reflecting that stocks are still more attractive than bonds. Looking back on historical experience, whenever economic growth and inflation heat up, U.S. stocks can resist The impact of rising market interest rates.

For example, in the past 30 years, when market interest rates have risen by more than 0.5 percentage points within three months, the benchmark index has risen by an average of 3.9% during the benchmark period. Although long-term interest rates have rebounded by 0.8 percentage points this year, the benchmark index still strengthened by nearly 4%…

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