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Bank of America: International Stocks Top Picks for Next Five Years

A recent investor survey reveals strong confidence in international equities outperforming US stocks over the next five years. The MSCI All-Country ex-US ETF has surged 15% this year, vastly outpacing the S&P 500’s modest gains. Factors such as US trade policies, geopolitical risks, and a weakening dollar are reshaping market preferences, with investors rotating into emerging markets and Eurozone assets. Additionally, Etsy's stock sees an upgrade thanks to its resilience amid changing Chinese tariffs.

Bank of America: International Stocks Top Picks for Next Five Years

Global Equities Set to Outperform US Stocks, Say Investors

According to the latest survey by a leading financial institution, international stocks are the favored investment for the coming five years. Investors overwhelmingly expect markets outside the United States to deliver stronger returns than their American counterparts.

The survey highlights a significant shift in sentiment, with fewer than one in four investors anticipating US assets to dominate performance rankings. Bonds, meanwhile, are expected by just 5% of respondents to be the best-performing asset class ahead.

International Markets Lead with Impressive Gains in 2025

Data reveals that the iShares MSCI All-Country World Index ex-US ETF (ACWX) has surged by 15% in 2025, starkly outperforming the S&P 500, which has seen only a 2.6% increase. This marks the largest margin of outperformance by ACWX compared to the S&P 500 since the ETF’s inception in 2008.

This robust showing coincides with a notable decline in US dollar positioning, reaching lows not witnessed in over two decades. The dollar's weakening has been influenced by geopolitical uncertainties and evolving trade policies, raising questions about its safe-haven status.

Impact of Trade Policies and Global Tensions

Recent US trade measures, including tariffs on imports introduced earlier in the year, coupled with ongoing negotiations with trade partners, have stirred market dynamics. Alongside escalating tensions in regions like the Middle East and Europe, these factors have propelled investors toward alternatives such as gold, which remains the most crowded trade for the third consecutive month, with 41% of investors holding long positions.

Investor Rotation Toward Emerging Markets and Europe

In June, there was a noticeable tilt among investors favoring the Eurozone, emerging markets, and banking sectors, while simultaneously reducing exposure to US stocks, the US dollar, and the energy sector.

One strategist pointed out, "Investors are most overweight Eurozone, emerging markets, and banks versus being underweight US stocks, the US dollar, and energy."

Wall Street Spotlight: Etsy's Encouraging Outlook

In related market news, a prominent financial firm raised its price target on Etsy shares by 9%, from $55 to $60, signaling an estimated 11% upside from recent closing prices. Analysts advised buying the dip, citing Etsy's relative resilience compared to competitors such as Temu and Shein, which face challenges from changing Chinese trade policies and rising tariffs.

Despite the elimination of the De Minimis exemption in China affecting some sellers, Etsy appears better insulated from cost pressures, making it a compelling pick amid the shifting trade landscape.

Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility
Japan’s Rising Bond Yields Raise Fears of Capital Outflows and Market Volatility

Yields on Japan’s long-term government bonds have reached near-record highs, fueling fears of capital repatriation by Japanese investors from the U.S. and potential disruptions in global financial markets. Experts warn that rising yields and a strengthening yen could unwind the yen carry trade, impact U.S. equities, and tighten global liquidity conditions. While some foresee a gradual adjustment, the evolving bond market dynamics warrant vigilant observation given their broad economic implications.

Investors Skeptical of 'TACO' Trade Amid Trump's Tariff Policy Shifts
Investors Skeptical of 'TACO' Trade Amid Trump's Tariff Policy Shifts

The 'TACO' trade refers to President Trump's pattern of imposing tariffs only to later reduce or delay them, sparking market swings. Investors find it challenging to form confident positions amid shifting policies. Recent tariff announcements caused sharp equity sell-offs followed by rallies when tariffs were rolled back. Experts warn that relying on a guaranteed 'Trump put' is risky, as market skepticism grows and companies adjust by reshaping supply chains.

Bank of America Sees European Pharma as a Winner Amid Potential Trump Tariffs
Bank of America Sees European Pharma as a Winner Amid Potential Trump Tariffs

Bank of America identifies the European pharmaceutical sector as a key beneficiary if U.S. tariffs imposed by the Trump administration proceed. Despite recent declines due to tariff fears and other factors, valuations are at their lowest since 2009, suggesting an undervalued opportunity. Analysts also note potential gains in Swiss stocks amid concerns of a global economic slowdown, particularly in pharma and consumer sectors.

Investors Reevaluate US Exposure Amid Political Uncertainty and Market Shifts
Investors Reevaluate US Exposure Amid Political Uncertainty and Market Shifts

Amid growing political uncertainty and social unrest in the U.S., investors are rethinking their market exposure. Tariff policies, potential new taxes on foreign investments, and recent riots in Los Angeles contribute to cautious sentiment. Despite these challenges, the U.S. market remains resilient, while Europe gains appeal as a diversified alternative.

Global Investors Shift Focus: The Rise of the 'Anywhere But USA' Trade
Global Investors Shift Focus: The Rise of the 'Anywhere But USA' Trade

Concerns over U.S. economic policies, fiscal imbalances, and currency weakening are driving a shift in investor preference known as the 'Anywhere But USA' trade. Market experts highlight rising opportunities in Europe, emerging markets like India, and safe-haven assets in the UK. This global diversification reflects a broader recalibration toward balanced, multipolar growth amid increasing market volatility and geopolitical risks.

China's Central Bank Increases Gold Reserves for Seventh Consecutive Month
China's Central Bank Increases Gold Reserves for Seventh Consecutive Month

China's central bank continued its gold buying spree in May, marking the seventh consecutive month of accumulation. Gold reserves grew to 73.83 million fine troy ounces, valued at nearly $242 billion. Despite gold prices stabilizing after an April record high, China’s purchases reflect strategic diversification away from dollar assets. Globally, central banks are expected to buy 1,000 metric tons of gold in 2025, signaling sustained confidence in bullion as a reserve asset.

Apollo Plans $100 Billion Germany Investment as Investors Shift Toward Europe
Apollo Plans $100 Billion Germany Investment as Investors Shift Toward Europe

Apollo Global Management aims to invest $100 billion in Germany over the next decade, reflecting a broader trend of private capital redirecting from U.S. markets to Europe. Driven by Germany's political stability, infrastructure initiatives, and strong sectoral opportunities, investors are increasingly bullish on European markets with significant growth in private equity, credit, and real estate segments.

European Markets Edge Lower Despite Progress in U.S.-China Trade Talks
European Markets Edge Lower Despite Progress in U.S.-China Trade Talks

European stocks are expected to dip at opening hours even as the U.S. and China announce a tentative trade agreement. Inditex, Zara's parent company, posted quarterly revenues slightly below forecasts, citing a sluggish start to summer sales. Investors remain cautious ahead of U.S. inflation data and important corporate and economic events taking place today.

Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025
Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025

In 2025, central banks globally are bolstering gold holdings as a hedge against economic and geopolitical uncertainties. Nearly 95% of reserve managers anticipate growth in gold reserves, driven especially by emerging markets prioritizing gold for value preservation and portfolio diversity. Additionally, there's a notable shift towards domestic gold storage and scaling back US dollar reserves in favor of alternative currencies.

Why Fund Managers Are Shifting Focus to Emerging Markets in 2025
Why Fund Managers Are Shifting Focus to Emerging Markets in 2025

Rising global volatility and evolving trade policies have prompted fund managers to turn toward emerging markets, with allocations reaching their highest levels since 2023. Countries like Uzbekistan stand out for their strong growth and fiscal reforms, while the broader Global South offers demographic advantages and economic potential. Despite short-term uncertainties, emerging markets present long-term value for investors seeking diversified opportunities.

JPMorgan Highlights International Stocks and AI as Top Picks for H2 2025
JPMorgan Highlights International Stocks and AI as Top Picks for H2 2025

As economic uncertainties mount in mid-2025, JPMorgan Asset Management advises investors to focus on the sustained momentum in international equities and the expanding influence of artificial intelligence. International developed and emerging markets have surged over 17%, outpacing U.S. gains, while AI's next growth phase extends beyond tech giants to sectors like utilities and industrials. JPMorgan also anticipates further U.S. dollar depreciation, enhancing overseas investment appeal. This nuanced outlook provides investors with strategic pathways amid shifting global economic and technological landscapes.

Moody’s Upgrades Turkey’s Debt Rating Amid Economic Reforms and Cooling Inflation
Moody’s Upgrades Turkey’s Debt Rating Amid Economic Reforms and Cooling Inflation

Moody’s Investors Service has raised Turkey’s long-term debt rating from B1 to Ba3, emphasizing successful economic reforms, a tightening monetary policy, and slowing inflation that has dropped to 35%. Despite this positive shift, challenges remain, including limited foreign exchange reserves and ongoing inflation risks. Experts highlight that this upgrade signals renewed investor trust, but caution that sustainable growth depends on continued policy discipline and geopolitical stability.

Fed Holds Rates Amid Inflation Rise and Economic Slowdown Forecasts
Fed Holds Rates Amid Inflation Rise and Economic Slowdown Forecasts

The Federal Reserve maintained current interest rates between 4.25% and 4.5% while projecting inflation will surpass 3% in 2025. Economic growth is expected to slow to 1.4%, with tariff effects slowly impacting consumer prices. Markets remained flat in the U.S., though Asia-Pacific stocks declined. Geopolitical tensions persist as Israel denies seeking regime change in Iran, and investor interest shifts toward emerging markets.

Trump Denies Iran Peace Talks Amid Rising Middle East Tensions
Trump Denies Iran Peace Talks Amid Rising Middle East Tensions

President Trump refutes reports that he contacted Iran for peace talks, emphasizing a broader goal beyond a ceasefire—seeking Iran’s complete abandonment of nuclear weapons. Amid escalating clashes between Israel and Iran, Trump hints at potential diplomatic envoys and stresses the urgency of resolving the conflict beyond temporary ceasefires.

Xi Jinping Strengthens China-Central Asia Ties with Kazakhstan Summit
Xi Jinping Strengthens China-Central Asia Ties with Kazakhstan Summit

Chinese President Xi Jinping reinforced ties with Central Asia during a summit in Kazakhstan, signing a pact emphasizing “eternal friendship” with nations rich in resources and strategic location. China’s growing economic influence, through massive investments and infrastructure projects, aims to balance regional power dynamics traditionally dominated by Russia while promoting trade and stability.