US stocks will still perform strongly in the first half of 2024, but investors need to broaden their horizons and increase opportunities for other asset classes.

According to a recent client report from the strategy team of Crédit Industriel et Commercial (CIC) Bank, the bank has been heavily weighted in Wall Street stocks, accounting for 30% of its total investment portfolio since June last year. The latest strategy recommendation does not change this proportion, but adds more global emerging market stocks, including the first over-weighting of Chinese stocks since the end of 2022, while reducing the over-weighting of Japan.

Many major Wall Street banks' expected gains this year are lower than the 24% return of the S&P 500 index in 2023, but with the index up 15%, these banks have raised their expectations. As early as March, Crédit Industriel et Commercial (CIC) Bank raised its S&P prediction to 5500 points, slightly lower than most current targets.

"If it weren't for the uncertainty of the French election, we would significantly increase our investment in European stocks," strategists said.

Despite the overall optimistic performance of European stocks this year, the French CAC 40 index has only risen 0.6%. As French President Macron announced early elections, investors have withdrawn, and his party suffered a catastrophic defeat in this month's European Parliament elections against far-right opponents.

Crédit Industriel et Commercial (CIC) Bank favors small companies in the region, citing historic lows in the eurozone unemployment rate, falling interest rates, and strong profits in outer countries like Italy and Spain. The latter is the "only country close to upgrading US GDP growth."

Therefore, the bank's strategist has increased its underweight in US small-cap stocks and increased its allocation of European small-cap stocks from underweight to neutral, while increasing its exposure to UK bonds, expecting the Bank of England to cut interest rates soon.

In addition to stocks, the bank has reduced its fixed-income investment, avoided sovereign bonds, and began reallocating cash to corporate debt, while expanding to high-yield bonds.

In the commodity market, strategist Bokobza and his team recommend taking profits when oil prices rise - the global benchmark Brent crude oil has risen more than 10% this year - as cautious sentiment rises after OPEC and its allies announced earlier this month that they will gradually withdraw their voluntary production cuts later this year.

Last month, the strategy team also closed its long positions on copper, stating that investors' exposure was too large, but noted that the bullish drivers for gold "still exist."

Edited by Jeffrey