Rayli Bank: Still most optimistic about the US stock market this year, focusing on AI-related software.

Norman Villamin, Chief Investment Officer of RHB Bank, stated that he remains very optimistic about the US stock market this year, although the returns in the past two years have been extremely good. Investors should expect lower returns this year and should look for opportunities in structural themes, including AI-related software. Additionally, the bank continues to be bullish on gold, expecting the price of gold to reach $3,000 per ounce this year. Last year, the US stock market was mainly driven by AI, but the focus was mainly on hardware. Villamin believes that the development of AI is similar to the rise of the internet in the past, where initially there was a need for hardware upgrades, followed by a transition to software. Investors now need to adjust their portfolios along with the development of AI, expanding their investments from just hardware to include software and applications. The bank predicts that Trump's immigration policy will lead to increased inflation, with US inflation expected to start the year at a low of 2%, but rebound in the second half of the year, with a risk of reaching 3% by the end of the year. Therefore, the pace and extent of interest rate cuts are expected to be lower than market expectations, with the Federal Reserve expected to pause rate cuts in the second half of the year. Villamin also suggests that investors should actively manage bond risks, not relying solely on long-term investment-grade bonds. He recommends adopting a strategy of high returns with a short holding period, or considering hedge funds for diversification.