Conference Presentation, Panel
Global Institutional Investors: Assessing U.S. Opportunities
Milken InstituteStefan Dunatov, Sophia Cheng, Lisa Gray, Juan Manuel Valle Pereña, Xiaoliang Zhao, Lisa Graham
- The CIC maintains significant exposure to the US market, with approximately 50% of assets invested there, while Cathay Life holds over 44-45% of its fixed income portfolio and over 20% of total life assets in the US.
- An entry into the US market via a mandate is planned within the next six months, contingent on reforms such as tax changes and asset recycling opening the infrastructure sector.
- Investment strategies are shifting toward a barbell approach with increased focus on alternatives including private credit and real estate to enhance returns, though a new administration's policy changes remain a key variable for potential manufacturing and infrastructure investment.
- The US macro environment is expected to remain stable for the next few quarters, characterized by solid growth, extremely low unemployment, and strong corporate governance, despite concerns regarding high valuations and low return environments.
- Long-term outlooks project the US economy to grow faster with increased productivity if fiscal and infrastructure reforms are delivered, with emerging Asia expected to account for half of global GDP by 2050.
- Risks include the possibility that reforms may not hold, which could cause investors to wait to avoid buying at peak prices, alongside potential impacts from US bond supply and demand on interest rates and hedging costs that have historically remained below 1%.
- The US market is anticipated to continue offering excellent long-term diversification, high equity liquidity, and a unique role as a safe haven during crises, provided debt levels do not become excessive and central banks retain power.
- Future regulatory environments are expected to open more investment options every two years, facilitating direct investment, while a potentially less correlated global economy may further incentivize US investment despite trade implications.