According to Zhitong Finance APP, Duncan Lamont, head of the investment strategy research department at Schroders, expects the US stock market to maintain its global lead in 2024, marking six out of the past seven years at the top. There is a common prediction that the long-term advantage of US stocks will come to an end, leading to a belief that now is the time to reduce Shareholding in US stocks, particularly large-cap stocks. However, not considering the effective counterarguments would be insufficient for a comprehensive view.

Except for the technology bubble period, US stock valuations are nearing their most expensive levels in the past 143 years. While this is not a new argument, this year's rebound has pushed valuations to unsettling heights. In contrast, valuations in other regions are relatively reasonable. Compared to historical figures, valuations outside of the USA are close to fair value. Thus, from a relative value perspective, other stock markets compared to the USA still have valuations at historical lows.

In fact, the USA is not the only market expected to perform well. It is anticipated that in the next 12 months, about half of the companies in Europe and Japan will achieve double-digit profit growth, slightly higher than that of the USA, while 44% of UK companies are also predicted to perform impressively.

Productivity levels are key drivers of economic growth. In the years following the global financial crisis, US productivity growth outpaced that of other countries, and during the outbreak of the COVID-19 pandemic, productivity did not decline but instead accelerated further. This gap is expected to persist. If these predictions hold true, the economic exceptionalism of the USA will continue. Furthermore, the labor-age population in the USA is expected to increase, while it will decrease in other countries, supporting long-term economic growth in the USA, although all of this also depends on the future development of immigration policies.

The USA also performs better in economic cycles, delivering more positive economic surprises than other regions. The Schroders economic research team recently raised its forecasts for US economic growth in 2025 and 2026 in light of President Trump's plans. The expected growth for next year is now 2.5%, up from the previous 2.1%. In contrast, the growth forecasts for the Eurozone and the United Kingdom are only 1.2% and 1.6%, respectively.

However, behind strong economic growth lies a cost: rising inflation expectations. While the basic prediction is that the US economy will perform strongly, in a downside scenario, higher inflation and interest rates could push the USA toward stagflation.

About 60% of the revenue of large-cap stocks in the USA comes from the USA, while other markets account for less than half. If the USA economy indeed thrives, US companies will be the main beneficiaries. It is worth noting that small-cap and value stocks in the USA are more reliant on domestic growth than large-cap stocks, and if the above is the main reason supporting US stocks, this may offer a better investment approach for US equities. Additionally, companies engage in Share Buyback and mergers and acquisitions.trading, which also provides a continuous source of demand for US stocks.