(Corrects paragraph 5 to say U.S. (not global) investors) SINGAPORE, Feb 27 (Reuters) - UBS said on Friday it has cut its recommended allocation to U.S. equities to neutral, as the world's biggest
UBS downgrades U.S. equities to neutral as global growth broadens
(Corrects paragraph 5 to say U.S. (not global) investors)
UBS shifts U.S. equities allocation amid broader global growth
UBS cuts recommended allocation to U.S. equities
SINGAPORE, Feb 27 (Reuters) - UBS said on Friday it has cut its recommended allocation to U.S. equities to neutral, as the world's biggest stock market risks lagging behind while growth accelerates elsewhere.
Key drivers: earnings sensitivity, valuations, diversification and dollar risks
In a note, strategists Andrew Garthwaite and Marc el Koussa cited reasons such as the relatively lower sensitivity of U.S. corporate earnings to global growth, high valuations, the trend of funds diversifying outside of the United States and downside risks to the dollar, among other things.
Operational leverage and performance in stronger global growth
"The U.S. has the lowest operational leverage of any major region and thus historically underperforms if global growth accelerates to be above 3.5%," they said.
UBS global GDP outlook for 2026
UBS forecasts global GDP to come in at 3.4% in 2026.
Investor flows: waning Big Tech returns and policy uncertainty
U.S. investors have been pulling money from the world's largest stock market, as waning Big Tech returns and chaos over domestic policymaking leaves them searching for alternatives.
Dollar weakness adds to pressure
Weakness in the dollar - which last year clocked its worst annual performance since 2017 - has been another push factor.
Marketing insights and ETF flow signals
"From our marketing in North America, it seems unambiguous that funds will go global," said the strategists.
"ETF flows show diversification is happening."
U.S. market weight remains dominant in global benchmarks
Still the U.S. market is so large that even a benchmark allocation would remain a hefty one, with U.S. stocks comprising more than 70% of the MSCI World Index of global stocks.
(Reporting by Rae Wee; Editing by Jacqueline Wong and Stephen Coates)
