Deutsche Bank AG(US:DB) 2 1 Shi Ji Jing Ji Bao Dao·2025-06-11 10:58Core Viewpoint - The weakening of the US dollar and the expectation of interest rate cuts by the Federal Reserve create a critical allocation window for non-dollar assets [1][2]. Economic Outlook - The US economy has been experiencing a temporary slowdown since the beginning of the year, characterized by increased imports and weakened consumer and business confidence, which is expected to continue for the next two to three quarters [1]. - The Federal Reserve is anticipated to start cutting interest rates by the end of this year, with a total of four cuts expected by mid-next year, potentially lowering the federal funds rate to a range of 3.25%-3.50% [1]. Investment Strategy - Investors are advised to consider reallocating to non-dollar assets, particularly European industrial and banking stocks, which are expected to benefit from significant fiscal stimulus plans in Europe [2][4]. - The euro is projected to appreciate against the dollar, with an expected exchange rate of 1.18 by August next year, indicating a potential 4% increase [4]. European Market Insights - The European investment landscape has seen a notable shift in confidence, driven by factors such as the ongoing Russia-Ukraine conflict and Germany's announcement of a €500 billion fiscal stimulus plan focused on defense and infrastructure [4]. - European investment-grade bonds, particularly from the financial sector, offer attractive yields around 3.5%, despite being lower than US Treasury yields [4]. Australian Market Perspective - Australian government bonds are also viewed positively, with 10-year yields exceeding 4%, and the Australian dollar is expected to appreciate over the next 1-2 years due to global commodity price influences [5]. Gold and Commodity Investments - Gold is seen as a significant hedge and diversification tool, with potential prices reaching $3,700 per ounce by June next year, supported by geopolitical uncertainties and central bank purchases [5]. - The allocation to gold and other commodities should be limited to around 5% of the investment portfolio, with a greater focus on stocks and bonds [5]. Focus on Chinese Technology Stocks - Chinese technology stocks, particularly those related to artificial intelligence, are highlighted as promising investment opportunities, driven by recent fiscal and monetary stimulus and growing international interest [6]. - The rapid development of AI in China is supported by significant investments from major tech companies, enhancing the long-term growth potential of the sector [6]. Comparison with Japan's Economic Situation - China's economic resilience is contrasted with Japan's past economic challenges, emphasizing that China's growth rate remains around 5% and urbanization offers substantial growth potential [7]. - Despite adjustments in the real estate market, China's industrial and manufacturing investments are growing at rates of 9%-10%, significantly higher than pre-pandemic levels [7].