Matthew Hinman

As Q3 draws to a close, our attention turns to the opportunities and risks that Q4 may present. While much of the global focus has been on AI and the U.S. markets, China has quietly taken the lead. Year-to-date, China indices have significantly outperformed U.S. markets. Both regions are benefiting from substantial capital expenditure, and the latest iterations of Chinese AI have delivered not only comparable performance but also a notable step-change in efficiency. In the U.S., however, the macroeconomic backdrop, particularly on the employment front, remains a concern. The sharp downward revisions from employment data released in Q3 reinforce our cautious stance, as we see the risk of further deterioration ahead. We remain constructive on the U.K., but persistent political headwinds continue to act as a major obstacle to any meaningful reacceleration in growth at this stage. As we move into Q4, we remain underweight U.S. equities given high valuations and a softening economic backdrop. Europe also stays underweight in our positioning, with slow growth and no clear catalyst for reacceleration. By contrast, we see more compelling opportunities across Asia, led by China, where policy support, attractive valuations, and advances in technology provide a favourable environment.

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