Twice a year we organize Equity Day at Robeco, bringing together more than 100 analysts and portfolio managers from our Fundamental, Quant and Thematic teams. During last week’s event in Rotterdam, we discussed many investment ideas across the different regions, next to new quant tools and process improvements. One of the topics examined was a question we often get asked by clients: has US exceptionalism come to an end? Not yet in our view. Strong global companies in banking, defense, software and technology maintain market leading positions and continue to generate high returns on invested capital. In global trade, the US dollar remains the currency of choice for large transactions. As an example, Saudi Arabia alone generates more than USD 1 billion a day from oil exports. There are no real substitutes to the US dollar for settling such large transactions and to US Treasury bills for parking the proceeds. Initiatives to create alternatives will take years to gain depth.

With all-time highs for the S&P 500 in mind, the current policy uncertainty makes us cautious. There are three related challenges to macroeconomic stability currently manifesting themselves: trade risk from the US with President Trump promising another round of unilateral tariff pronouncements as his 90-day pause expires in early July; macro risk as the impact of the tariffs and related uncertainty starts to feed through to economic data; and rate risk as the bond market contemplates a rapidly worsening US fiscal position. The tax initiatives in the ‘big beautiful bill’ threaten to worsen rather than improve the situation.

As a result, we keep our global strategies positioned somewhat defensively even as we have ridden the recent recovery in US stocks, and tech in particular. Europe and Asia offer interesting opportunities and we have shifted our portfolios accordingly. The release of the ‘Schuldenbremse’ in Germany, an extensive European investment agenda aimed at creating less dependence on US companies for defense and technology infrastructure, increases the region’s attractiveness and our European team has many good stock ideas.

Several countries in Asia are benefiting from the current shifts in global trade and in this Quarterly we describe some of our preferences. A dollar gradually drifting lower combined with rising earnings as corporates leverage AI, supported by low valuations could see a sustainable bull market for Asia re-emerge.

Amidst uncertainty, we optimistically keep finding opportunities. Happy summer!