US tech stocks remain top draw despite de-dollarisation trend, UBS and Julius Baer say

Swiss banks advise investors to keep US tech stocks as core holdings due to their innovation and strong earnings

International investors should keep US tech stocks as a core part of their portfolios even as the de-dollarisation trend continues, according to Swiss banks UBS and Julius Baer.

A rally in tech stocks pushed the S&P 500 to an all-time high of 6,263.26 on Wednesday, raising Nvidia's market capitalisation to US$4 trillion - the first company in the world to reach that milestone.

"Can this madness continue?" Mark Andersen, managing director of the Chief Investment Office at UBS Global Wealth Management, asked rhetorically on Thursday. "Yes, we think it can."

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Meanwhile, Bhaskar Laxminarayan, chief investment officer for Asia and the Middle East at Julius Baer, said no other market or sector offers the same investment impact or innovation as the US tech sector.

"No other part of the world, including China, gives you the same impact in the portfolio content," he said.

There are close to 700 tech unicorns - start-ups valued at more than US$1 billion - in the US, 162 in China and more than 100 in Europe, according to Julius Baer. Out of the 30 largest technology stocks in the world, 22 are from the US.

Echoing other international banks, UBS and Julius Baer expect US equities to remain strong, supported by powerful structural drivers such as AI, technological innovation and strong corporate earnings, despite dollar depreciation.

Once the US Federal Reserve starts cutting rates, a bit of tailwind would be created for US equity markets, said UBS' Andersen.

The US dollar has been weakening since January, recording some of its steepest falls when US President Donald Trump imposed hefty tariffs on China and other trading partners, sending markets into a tailspin.

The US Dollar Index, which tracks the dollar's strength against a basket of major currencies, was expected to decline to 91 by mid-2026 - a level last seen in June 2021, according to Morgan Stanley. The index stood at 97.40 on Thursday.

Amid the dollar's weakening, global investors have started diversifying their funds into other markets. Over the next 10 years, investors were expected to reduce some exposure to the US and increase allocations to Europe and Asia - specifically China and India in Asia, and Switzerland and Germany in Europe, according to Julius Baer.

While UBS recommends allocating more than 50 per cent of a globally diversified portfolio to US equities - less than their roughly two-thirds share of global market capitalisation - China and other countries will form an important part of the diversification, according to Andersen.

In China, technology, electric vehicles and new consumption sectors could provide opportunities, despite economic challenges ranging from trade tensions to sluggish consumption.

However, much of this had already been priced in, according to Richard Tang, China strategist and head of research in Hong Kong at Julius Baer.

"If you look at the bottom-up arguments in China, technology is one of [the sectors] that would get you excited," Tang said.

The Hang Seng Tech Index, which includes some of the largest technology companies from the mainland, has risen nearly 20 per cent this year.

Clients heavily concentrated in US assets are increasingly interested in investment-worthy Chinese tech names, according to Min Lan Tan, head of the Asia-Pacific Chief Investment Office at UBS.

US tech stocks remain top draw despite de-dollarisation trend, UBS and Julius Baer say

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