Arun Sai, senior multi-asset strategist at Pictet, argues that while earnings growth is broadening into sectors like industrials and utilities, the US market remains overly reliant on a handful of AI-linked mega-caps. With 70 percent of US earnings growth tied to this narrow concentration, Sai warns that valuations leave little margin for error. He prefers emerging markets, projecting a 56 percent earnings growth rate for the region this year, and has upgraded gold to overweight as central bank demand surges.
Pictet and Indosuez Diverge on US Equity Outlook
Wealth managers remain committed to equity markets despite persistent volatility, yet firms are split on the viability of US stocks. While Pictet Asset Management maintains a neutral stance on American equities due to demanding valuations, Indosuez Wealth Management continues to see upside potential fueled by the ongoing artificial intelligence investment cycle.
Conversely, Adrien Roure of Indosuez expresses a more constructive view on US markets. He emphasizes that the current investment cycle remains robust and suggests that small and mid-cap stocks—recently hindered by high real rates—are poised for a turnaround. While Roure acknowledges the risks of leverage in Asian semiconductor markets, he views any short-term corrections as entry points. Regarding fixed income, the firms also diverge: Pictet avoids extending duration due to inflation concerns, whereas Indosuez favors short-dated euro area maturities and high-quality local currency debt in emerging markets.
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