Why UBS is betting on emerging markets over US stocks
UBS just downgraded US stocks to a "benchmark" rating, pointing to concerns such as low operational leverage, dollar risk, buyback yield normalization, valuation, and policy volatility.
The bank says it's now more into emerging markets instead.
As UBS puts it, "it historically underperforms if global growth accelerates to be above 3.5%"—and they're expecting global growth of 3.4% in 2026.
Euro's strength against dollar could add pressure on US stocks
UBS also predicts the euro will get stronger against the dollar by early 2026, which could put even more pressure on US stocks.
On top of that, American companies are facing valuation headaches: buyback yields have dropped and tech sector performance is uneven, making the US market look pricey compared to Europe.
All this has UBS rethinking where the best opportunities might be right now.