Morgan Asset Management: The Big and Beautiful Act is expected to support the U.S. economy, and investors should focus on industry-specific tariffs

According to the Zhitong Finance APP, Morgan Asset Management stated that the uncertainty of the tariff war is expected to slow down U.S. economic growth in the second half of this year, but the implementation of the "Big and Beautiful Act" should provide some bottom support, and the price increase due to tariffs is only temporary, with inflation expected to continue to decline to the Federal Reserve's 2% target before the end of next year. Morgan Asset Management's global market strategist, Zhou Huantong, believes that last week's trade agreement between the U.S. and Vietnam has provided greater certainty for businesses' planning, but reminds investors to focus on industry-specific tariffs, such as those on pharmaceuticals from the EU and automobiles from Japan and South Korea, as they may persist after Trump 2.0.

The grace period for equivalent tariffs granted by President Trump to trade partners outside of China will end on Wednesday, and the tariff war is heating up again, especially since he mentioned last week that he has no intention of extending it. However, Zhou Huantong believes that since the unilateral tariff rates he announced will only take effect from August 1, the risks have been postponed by more than half a month, and a large number of discussions regarding trade agreements with specific countries are expected in the coming weeks.

Zhou Huantong believes that the fiscal expansion and regulatory easing of the "Big and Beautiful Act" will take effect later this year and will continue to drive U.S. economic growth next year, providing a positive catalyst for the stock market. Recently, capital has flowed into stock markets outside the U.S., more due to the risks of trade negotiations, a weakening dollar, and the fading of "American exceptionalism," meaning the market no longer believes that the U.S. economy is the only strong one.

Regarding whether to continue betting on artificial intelligence (AI) concept stocks, she pointed out that the AI sector has performed strongly recently, reflecting the market's growing recognition that the increasing prevalence of AI will significantly improve efficiency, thereby suppressing prices and stimulating consumption. Large tech companies will continue to lead AI innovation, but investment opportunities are gradually shifting towards companies that can effectively apply AI. As AI is increasingly used across various industries such as finance, manufacturing, and healthcare, it is transforming from a single theme into a means of enhancing corporate performance, and how effectively AI is utilized will determine the strengths and weaknesses of companies.

Zhou Huantong believes that given the current policy and geopolitical uncertainties, investors should diversify their allocations across different markets and industries, with Chinese stocks still playing an important role in global asset allocation. The Chinese government is boosting confidence in private enterprises through regulatory easing and a more transparent antitrust and merger framework, while technological breakthroughs like DeepSeek and the success of domestic animated films continue to show positive signs of market confidence.

She is optimistic that potential policy stimulus from the central government, along with the development of AI technology, is expected to support the performance of tech stocks in the short term and benefit a broader range of economic sectors in the long term, while maintaining optimism about state-owned enterprises that focus on shareholder returns and governance