Global Rotation and The Case for a Global Shift in Investor Preferences

After years of marked out-performance of US stocks, a global shift might be unfolding. Asian stocks
have been strong and investment strategists are looking with interest at Europe. At the same time,
frontier and emerging markets are also not un-investable. Yet, despite newfound momentum, non-
US equities have only outperformed marginally year to date. So, what does this mean: durable
rotation or false start?

Context matters. While America still enjoys a premium, thanks to its deep capital markets, economic
resilience, better liquidity and dominant innovation ecosystem. International value is becoming
harder to overlook. So, a more balanced global allocation may no longer be just prudent risk
management, but a smart strategy for enhancing returns.

Are we nearing an inflection point? Could a sustained decline in the US dollar further argue the case
in favour of international assets? If so, then broadening our exposure beyond the US isn’t just for
diversification – it may be a key driver of portfolio alpha.

European markets trade at a discount but have similar prospects to their US counterparts, and in
some cases an even better fundamental outlook — especially if we consider more government
stimulus is coming. The big picture – Europe is home to many good and globally diversified
companies and businesses.

More fractured supply chains and less friction in trade favour purchases in commercial aerospace,
even defence and various industrial large goods. Banks are well-capitalised and systemic risks now
under control. Similarly, valuations in developed Asian markets, including more mature Korea and
Japan, are extremely attractive. While, the emergence of South-East Asia, as a capitalistic, free-zone
area, which benefits from close ties to both the US and China is also undisputed. Savvy investors
should also consider a lack of exposure to Chinese equities as a major risk and attempt to avoid the
regret for missing outsized gains.

Over the last 30 or so years, China has perfected a formidable triple-axe comprised of the command
of raw materials, mastery of low-cost manufacturing, and now – by hint of drive, creativity and a
formidably well-educated cadre of scientists and engineers – an array of products that is comparable
or superior to American or Western manufactured ones. Look at the manufacturing know-how of
Foxconn or TSMC or product line-up of Huawei, BYD or Xiaomi, the last of which is only 15 years old.
Chinese pharmaceutical and bio-tech companies are also second to none in innovation and research.
Time is calling.

Investment always comes with a risk. Equity markets could be overly extended, and a more difficult
economic and political scenario could be upon us. The world is at war, as in Ukraine and in the
Middle East.

Diversification is paramount — so perhaps it now makes more sense not to be overly exposed to US
equities, as their outperformance has been largely driven by large-cap tech. In a world where
markets are shifting and power dynamics evolving, diversification is no longer just about mitigating
risk — it’s about capturing opportunity. The US remains the engine of global capitalism, and
exposure is essential. In uncertain times, resilience lies not in doubling down on past winners, but in
positioning broadly for what’s next.