Aberdeen Sounds Alarm on US Stocks, Diversifies Global Equities as Trump Tariffs Loom

Aberdeen is advising clients to reduce US equity exposure as uncertainty over "Trump tariffs" casts a shadow over global markets, according to Investment Director Blair Couper.

Speaking at a media roundtable in Bangkok on Monday, Couper revealed that since April, the prospect of new US tariffs has pressured equity markets, with their final form still undetermined.

He anticipates this uncertainty will diminish the dominance of the US stock market, which has historically been heavily weighted towards the "Magnificent 7" tech giants.

"US market valuations are quite elevated, and Magnificent 7 stocks are expected to gradually moderate," Couper noted. "At the S&P 500's current P/E ratio of approximately 25 times, historical backtesting suggests returns for these stocks over the next 10 years could be negligible."

The firm warns of potential US stagflation – combining slowing growth with rising inflation – though they expect President Trump will implement domestic economic stimulus measures.

In response, Aberdeen plans to reduce its US stock market weighting by approximately 15% below the MSCI World benchmark while increasing investments in emerging markets, Europe, China, and India.

Within its US holdings, the firm is moving towards quality mid- to small-cap stocks better positioned to weather economic headwinds.
 

Darunrat Piyayodilokchai, Head of Equities (Thailand) at Aberdeen Asset Management Thailand, highlighted the local impact, noting Bank of Thailand projections of modest 1.5-2% economic growth this year.

All three pillars of Thailand's GDP – exports, investment, and tourism – are expected to be affected:

Exports: Accounting for up to 60% of GDP, exports face significant impact from US retaliatory tariffs, with a decline probable in the second half of 2025.

Investment: Foreign investors may defer decisions if US tariffs are substantially high or if trade negotiations are protracted, though sectors like data centres, electric vehicles, and power plants are expected to remain resilient.

Tourism: The Tourism Authority has revised down its foreign tourist arrival forecast to 35.5 million, with Chinese tourist numbers expected to fall 25-40% from 2024 levels.

Darunrat projects one more Bank of Thailand interest rate cut this year and has revised down the estimated earnings per share for listed companies to 90 baht, from an earlier 96-97 baht.
 

Meanwhile, Aberdeen outlines three scenarios for the Thai stock market:

• With a 10% US tariff, the SET Index could reach 1,300 points by year-end.
• A tariff below 10% plus effective economic stimulus could push the index to 1,400 points.
• Failed negotiations resulting in a 36% tariff could drop the index to 900-1,000 points, though government intervention would likely support recovery.

Aberdeen currently favours high-quality stocks with robust financials and consistent dividends, particularly in banking, clean energy, telecommunications, and healthcare sectors.

The firm has also launched a Thai ESGX mutual fund that maintains 65% investment in ESG stocks with the remainder in government bonds, designed to adapt to changing market cycles even during economic slowdowns.