Professional investors across Europe, Asia and outside it have begun to panic about the deep they are in US equities, and most of them have no idea how to pull back without destroying everything. This exaggeration was not planned.
It just happened slowly and quietly, for years of America every time the rest of the world looked trembling. But now that Donald Trump back in the White House and global markets is unstable, this old habit is becoming a responsibility.
For decades, putting money in the United States was the safest contribution you could make if you manage a big portfolio. Fabiaa Fedel, M&G Investment Investment Manager, Investment Investment, said: “If you didn't know where else to go was the US choice.”
He explained that no one was ever fired for too much leaning on US equities. Such a safe play was in the old days. But now, like Turkey like Turkey and the United Kingdom, they are facing the consequences of their own weird economic tests, the US does the same. And the damage is more difficult because US assets make up most of the major portfolios.
Wall Street dominance begins to cause alarms
Now the conversation is what a new “neutral” exposure should look like. Everyone wants to know the same thing – what is too much? Things are about 70% of the average market index consists of US companies.
It is reasonable for the US to provide high income and remain politically stable. But things have changed. The technical sector – which has been the main engine of their return – was built on the same global trade that Trump is now rolling back.
Global competitors are catching up. At the same time, political chaos and weak institutions begin to scare investors. European money managers who were the most aggressive in the US market chase will eventually resign.
This fear has begun to show. After a sudden decline in markets last summer, the concern exploded about the concentrated exposure to the US. Société Généra is now pushing what he calls great rotation, removal from US assets and other regions. And that's just not talking.
George Saravelos, the global leader of the Deutsche Bank FX Research, said: “The power evidence is, at best, to the current evidence of the current evidence to the very rapid slowdown in US capital and, at worst, to continued active dilapidation from the US assets.” He added that foreign investors are now basically a strike of buyers, deciding how little they put in the US in ETF.
Global investors are looking for a new normal
The real question is that no one agrees with the right level of US exposure. Fabiaa said her customers in Europe and Asia do not ask if they should balance – they ask how. He said that American investors are still focused on their backyard and expect that everything will soon be normal. He doesn't think this happens.
He also recommended a different strategy. Instead of monitoring the size of the market, some exposure should reflect how much each country contributes to the global GDP. This would throw a US distribution of about 25%, can -thats can be 30% if you are shaving a share of China due to its poor accessibility.
But even Fabiana admitted: “It probably won't go 30 percent in my life.” This changed to manage the overhaul around the world.
A more realistic target can be 55%, based on Société Généra, according to that US companies earn such a large part of the world's revenue. It may -a little higher because the US market is thinner. However, this is still a major decline of the current 70%.
Any serious away from the US does not take place overnight. Nobody expects huge sales. The change is likely to come from new investment money. As it starts to flow to Europe, Asia or the resulting markets, the balance will change over time.
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