A Great Year for US Stocks? Not Compared With Rest of the World

Economic and Market Overview - The moves in the US economy have shaken confidence, weakened the dollar, and contributed to a significant rally in gold [1] - Concerns about political and fiscal stability in the US are growing, with Trump's tax and spending bill projected to increase the deficit and ongoing government shutdown since October [2] - The S&P 500's performance is lagging behind other global equity indexes, ranking 57th in local-currency terms and not appearing in the Top 10 or even Top 25 of best-performing equity indexes this year [4][6] Investor Sentiment and Behavior - Investor confidence in the US market is eroding due to the deteriorating fiscal situation and increasing policy uncertainty, prompting a shift towards non-US markets [7] - Foreign investors are becoming more selective, focusing on big tech rather than broad-based indexes, and are currently net underweight in US stocks [3][18] - Global investors are showing a preference for European and emerging markets, with a net 15% overweight in euro-zone peers and 27% overweight in emerging markets [18] Performance Comparisons - Despite an 11% rally in the S&P 500 this year, it still trails behind developed market benchmarks like Germany's DAX and Japan's Nikkei 225, as well as other countries like South Korea and Ghana [5][9] - The S&P 500's valuation is at a premium of 46% compared to the rest of the world, leading to concerns about overexposure to American equities [16] - The Hang Seng Tech Index in China has outperformed the Nasdaq 100, with a year-to-date advance of 40% [15] Sector and Regional Highlights - European markets are benefiting from lower interest rates and cheaper financing, with companies trading at valuations about 35% lower than in the US [10] - South Korea's Kospi index has risen 50% this year, driven by expectations of shareholder-friendly policies and advancements in the chipmaking sector [12] - Japan's stock market has reached all-time highs, fueled by expectations of pro-stimulus policies and significant gains in companies like SoftBank Group [14]