BlackRock: Continue to overweight U.S. stocks, but allocate below benchmark risk exposure to leave room for the private equity market

According to the Zhitong Finance APP, BlackRock's think tank believes that despite the high uncertainty in policy, the theme of artificial intelligence and strong corporate earnings allow BlackRock to tactically continue to overweight U.S. stocks. In the long term, BlackRock sees attractive investment opportunities in the private equity market, which will play a key financing role in the economic transformation process. Infrastructure equity, such as data center equity, is at the intersection of several disruptive trends, including the current AI-driven investment boom. To build a portfolio that can accommodate uncertain long-term signals and a turbulent short-term environment, the team believes that U.S. stocks will remain the main asset allocation in the portfolio, but the overall allocation to U.S. stocks will be below the benchmark public market risk exposure, leaving room for allocation to private market opportunities.

Due to rising interest rates, private equity funds are in a more difficult position than in the past. However, with valuations declining, current or future private equity funds are expected to benefit. In the medium term, as various economies undergo transformation driven by disruptive trends such as artificial intelligence, BlackRock believes that all types of assets hold investment opportunities. BlackRock believes that some of the most attractive opportunities may exist in the private market. Although private market assets are also inevitably affected by long-term uncertainty, many of these assets are expected to benefit from disruptive trends.

Despite U.S. stocks hitting new highs and most valuation metrics indicating that U.S. stocks are at historical highs, the theme of artificial intelligence and strong corporate earnings growth have bolstered BlackRock's confidence in U.S. stocks tactically. BlackRock finds that, according to some indicators, the current valuation of U.S. stocks, especially technology stocks, is comparable to the peaks during the internet bubble or the 1920s. However, during a transformation period, the judgment of reasonable valuations becomes more difficult. Taking the technology sector as an example, as investors flock to the theme of artificial intelligence, technology sector valuations often rise. Strong earnings growth may also support valuations, which BlackRock has observed; NVIDIA's revenue has increased nearly sixfold in just two years, but due to the faster growth rate of earnings compared to stock price increases, its valuation is still declining.

BlackRock's current fundamental forecast is strong corporate earnings in the U.S., but this outlook has suddenly changed in recent years. Given the current economic transformation and the uncertainty brought by U.S. policies, BlackRock is ready to adjust its views at any time. Last year, BlackRock created several potential economic scenarios to help navigate this turbulent environment. Although some information regarding U.S. policies is noisy, BlackRock expects this to become a concrete signal that needs to be adapted to