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Business Times
4 days ago
- Business
- Business Times
US exceptionalism under pressure, but far from over
US EXCEPTIONALISM – the belief that the US economy and financial markets are uniquely positioned to outperform other global markets over the long run – has come under intense scrutiny this year. US President Donald Trump's disruption of global trade through erratic policies and aggressive tariffs, his attacks on universities, and growing concerns over rising fiscal deficits should the One Big Beautiful Bill Act be passed have all contributed to outflows from US equity markets in recent months. To put the current scepticism into perspective, it is worth considering how US markets have performed over the longer term. Over the past two decades, the S&P 500 has delivered total returns of approximately 643 per cent, significantly outperforming other major indices including MSCI China (388 per cent), the Straits Times Index (355 per cent), Stoxx Europe 600 (290 per cent), and the Nikkei 225 (266 per cent), as at Jun 13, 2025. In our view, the structural advantages that have driven this outperformance in equity markets are still very much intact. Hence, it is premature to declare an end to US exceptionalism. Here are some structural drivers of US outperformance. Rich culture of innovation and entrepreneurship The US has long been a global leader in innovation and entrepreneurship. According to the 2024 Global Innovation Index (GII), the US is the third most innovative country in the world, ranking the highest in nine of the 78 GII indicators including the impact of its scientific publications, intellectual property receipts, average research and development spending of the top three companies per country, and the quality of its universities. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Home to world-renowned institutions such as the Massachusetts Institute of Technology, Stanford University and Harvard University, the US benefits from academies that not only produce cutting-edge research but also serve as incubators for startups and groundbreaking technologies. While recent policy shifts – such as federal funding cuts to universities and the termination of certain student visas – pose near-term challenges to the innovation ecosystem, we believe the country's culture of innovation culture will prevail, supported by a robust network of private capital, world-leading tech companies, and universities actively fighting for their autonomy in court. This enduring innovative spirit is further bolstered by America's strong culture of entrepreneurship, which openly embraces risk taking and tolerance for failure. This is evident in its relatively forgiving bankruptcy laws that permit bankrupt businesses to continue operations while they restructure their debts. It is no wonder that the US has such a high level of entrepreneurial activity. According to the 2024 Global Entrepreneurship Monitor report, the US achieved a Total Early‑stage Entrepreneurial Activity rate of 19 per cent, well above the 12 per cent average for high‑income economies. In other words, almost one in five adults in the US is actively starting or running a new enterprise. Well-developed and deep capital markets Alongside a strong culture of innovation and entrepreneurship, the US boasts the world's most liquid and deep capital markets, providing the essential funding and resources needed to scale startups into major enterprises. In 2024, US startups attracted 57 per cent of global venture capital investment, far outpacing Europe and China, which accounted for just 16 and 12 per cent, respectively. This abundant access to capital enables individuals with promising ideas to turn them into profitable businesses. In turn, the presence of high-quality companies on US stock exchanges creates a self-reinforcing cycle that attracts even more high-calibre firms. Many companies around the world have forsaken their home markets in favour of a US listing to gain better liquidity and higher valuations. Just this month, one of the UK's biggest fintech companies, Wise, announced plans to move its primary listing from the London Stock Exchange (LSE) to the US, citing the shift as 'a potential pathway to inclusion in major US indices, further enhancing liquidity and demand for Wise shares'. While stock exchanges such as the LSE and the Singapore Exchange continue to struggle to attract initial public offerings, the US remains a thriving destination for global listings. Global leadership of American companies Many US companies operate on a global scale, holding dominant positions not only in the US but also in various international markets. This is particularly evident in the technology sector where Big Tech companies dominate their entire industry or even multiple industries. For instance, Amazon, Microsoft and Alphabet hold more than 60 per cent of the global cloud market share, while Alphabet, Meta and Amazon collectively capture more than 60 per cent of global digital advertising spending. Their key competitive advantages – such as network effects and high switching costs – have made their products and services integral to the daily operations of global consumers and businesses, enabling them to sustain growth and profitability over time. Therefore, while it might be relatively easy to boycott US companies such as Tesla due to the availability of substitutes, avoiding companies like Google or Nvidia is far more difficult. Furthermore, although China is showing signs of catching up technologically with the US – as demonstrated by companies such as DeepSeek – we believe that export restrictions on technology and the substantial capital investments by US tech companies will allow them to maintain their lead in the artificial intelligence race. US dollar's status as the world's reserve currency Finally, the US dollar's role as the world's reserve currency continues to underpin demand for US assets, allowing the country to finance its debts and deficits at relatively low costs. This unique advantage enables the US to fund consumption and public spending more easily than most other nations. Despite growing calls for de-dollarisation, the greenback remains deeply entrenched in the global financial system, accounting for nearly half of Society for Worldwide Interbank Financial Telecommunication transactions and about 60 per cent of global foreign exchange reserves. The reality is that while the US dollar is far from perfect, there are currently no viable alternatives. The yuan remains constrained by capital controls, the euro lacks a unified fiscal framework, and non-fiat alternatives like digital currencies are still in their infancy. Therefore, although the US dollar may continue to face headwinds in the near term, its entrenched position in global trade, investments and reserve holdings is likely to ensure its continued dominance for the foreseeable future. Don't write off the US just yet Warren Buffett's famous advice – 'Never bet against America' – continues to hold true today. While short-term sentiment towards US assets has soured amid economic uncertainty, the long-term foundations of US exceptionalism remain intact. These structural strengths have underpinned decades of outperformance in US equities and, in our view, are unlikely to be undone by recent political disruptions. The writer is a research analyst with the research and portfolio management team of FSMOne Singapore, the B2C division of iFast Financial
New Straits Times
07-06-2025
- Business
- New Straits Times
Ringgit set to extend gains as US fundamentals weaken
KUALA LUMPUR: The ringgit is poised to extend its gains against the US dollar next week, buoyed by weakening US fundamentals, easing trade tensions, and stronger domestic economic resilience. The local currency has already strengthened against major and Asean currencies, and Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the trend is likely to persist as economic momentum in the US continues to lose steam. "We expect this trend to hold in the near term, driven by signs of a slowing US economy as business and consumer sentiment continue to weaken," he told Business Times. Afzanizam added that heightened uncertainty over US trade policies is further dampening confidence among businesses, prompting a reassessment of the greenback's global standing. "In some ways, the US dollar's dominance in the global economy is being revisited. This shift could favour emerging market currencies, including the ringgit, in the short to medium term," he said. Echoing this view, SPI Asset Management managing partner Stephen Innes said that foreign appetite for Malaysian assets remains strong, further supporting the local currency. "The ringgit is finally catching a break. With the US dollar on the back foot, tariffs de-escalating, and capital inflows into bonds and FX deposits rising, there is a tangible floor forming under ringgit," he said. Innes pointed to growing foreign appetite for Malaysian debt, highlighting the 3.3 times bid-to-cover ratio in May's 20-year government investment issue (GII) auction as a signal of revived confidence. He noted that foreign holdings of local government bonds have risen to 21.5 per cent, reversing a dip recorded in February. Adding to the ringgit's resilience, foreign currency deposits in local banks have climbed to a record 11.6 per cent of total deposits, offering a buffer against external shocks. Innes said that while Malaysia is not immune to global economic fragility, it is also not a sitting duck, with the domestic investment cycle now taking the lead. "If the trade war cools and global risk sentiment remains stable, Malaysia may continue to navigate the delicate balance between global volatility and domestic resilience. The ringgit, for once, has a shot at playing offence," he added. The ringgit opened higher this morning, extending its gains against the US dollar. At 8am, it stood at 4.2140/4.2335 compared with Thursday's close of 4.2245/4.2295. The local currency also traded mostly higher against major currencies, gaining ground against the Japanese yen and British pound, though it slipped slightly against the euro. Among regional peers, the ringgit appreciated across most Asean currencies, including the Singapore dollar, Thai baht, Indonesian rupiah and Philippine peso. It ended Friday's session at 4.2275 against the greenback.
Observer
02-06-2025
- Business
- Observer
Oman exerts efforts to support innovation
MUSCAT: The Sultanate of Oman is making dedicated efforts to support research and innovation, which has positively reflected in its advancement by 10 positions in the Global Innovation Index (GII) issued by the World Intellectual Property Organization (WIPO) over four years — rising from 84th to 74th place. Additionally, Oman improved its ranking in innovation outputs by 23 spots, moving from 109th to 86th. Dr Saif bin Abdullah al Haddabi, Under-Secretary of the Ministry of Higher Education, Research and Innovation for Research and Innovation, affirmed that the recent commendation by the World Bank for Oman Vision 2040 — which places significant emphasis on human capital development, education quality enhancement, and fostering a culture of research and innovation — reflects the concerted efforts of all relevant stakeholders working diligently to achieve the vision's goals. He explained that the innovation index is one of the most critical indicators as it influences competitiveness and other key metrics. The index is measured by WIPO, drawing data from the World Bank, Unesco and 13 other global institutions. At the national level, he noted, the index is measured through infrastructure and digital framework programmes. This includes research centres such as the Muscat Innovation Complex as an established infrastructure, as well as Oman Research and Education Network, which covers nearly 99% of institutions and connects all universities and colleges in Oman, offering over 23 services. He highlighted the development of digital infrastructure through Oman Research Portal, an integrated digital platform managing research programmes — evaluating, funding and tracking their performance. Additionally, efforts are underway to establish a research equipment platform cataloguing and classifying research tools used by academics, industrial institutions and other stakeholders. - ONA
Daily Tribune
22-05-2025
- Business
- Daily Tribune
DANAT bolsters cooperation with India gemology institute
The Bahrain Institute for Pearls and Gemstones (DANAT) welcomed a high-level delegation from the Gemological Institute of India (GII), as part of a strategic visit aimed at enhancing cooperation and exchanging expertise in the field of gemology. The visiting delegation included Dr. A. V. R. Reddy, CEO of GII, and Mr. S. N. Desai, Member of the Board of Trustees. The visit commenced with a presentation by DANAT CEO Noura Jamsheer, who outlined the Institute's mission to uphold and promote the Kingdom of Bahrain's longstanding legacy as a global hub for pearls, gemstones, and jewelry. She highlighted DANAT's achievements in becoming a regional leader in pearl and diamond testing services, offering expert services to clients both locally and internationally. Initiatives Jamsheer also shed light on the Institute's wide-ranging initiatives, including its advanced training programs, scientific and field research on various pearl and gemstone types, and its active participation in prominent regional and international exhibitions and forums. She emphasised the vital role DANAT plays in supporting the Kingdom's economy by bolstering trust in the jewelry sector and expanding market access through high-quality testing and certification. Laboratory As part of the visit, the Indian delegation toured DANAT's state-of-the-art laboratory, where they were introduced to the latest technologies used in gemstone analysis. The tour included demonstrations of the advanced equipment, methodologies, and testing protocols employed by the institute, as well as an introduction to the skilled Bahraini professionals contributing to its global reputation. Dr. Reddy, CEO of the Gemological Institute of India, provided a detailed overview of GII's work in research, standardisation of gem testing, education, and the development of skilled professionals in the field. He also discussed the Institute's efforts to remain at the forefront of scientific advancements, underlining opportunities for future knowledge sharing between the two institutions. On this occasion, DANAT CEO Noura Jamsheer expressed her appreciation for the visit and affirmed DANAT's openness to developing deeper collaborations with esteemed institutions like GII.
The Star
20-05-2025
- Business
- The Star
Foreign inflows into Malaysian bonds surge to RM10.2bil in April
KUALA LUMPUR: Foreign net buying of Malaysian bonds surged to RM10.2 billion in April 2025 from RM3.2 billion in March, driven by strong demand for Malaysian Government Securities (MGS) and Government Investment Issues (GII), said RAM Rating Services Bhd (RAM Ratings). In a statement today, RAM Ratings said MGS and GII attracted RM9.7 billion of inflows in April, up from RM3.0 billion in the preceding month. Additionally, the increase in April was supported by Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), which recorded RM480 million in inflows -- a reversal of the RM252 million outflows in the previous month. "The surge in April marks the second consecutive month of net inflows, despite "Liberation Day' tariffs announced on April 2, 2025,' it said. According to RAM Ratings, the Liberation Day tariffs sparked a sharp increase in market turmoil, with the volatility index published by the Chicago Board Options Exchange - often called the "Fear Index' - rising to a high not seen since the start of the COVID-19 pandemic. "Heightened risk aversion contributed to a weakening of the ringgit against the US dollar in the first week of April, as the local currency swiftly depreciated to 4.50 against the greenback as at April 9 from 4.43 as of end-March. "The 10-year US Treasury (UST) yield soared to a high 4.48 per cent as at April 11 from 4.23 per cent as of end-March. Market jitters, however, soon subsided amid signs of easing US-China trade tensions. The ringgit rose to 4.32 against the US dollar as of end-April while the 10-year UST yield retreated to 4.17 per cent,' it added. RAM Ratings said that adding to yield volatility, Moody's Ratings downgraded the US sovereign credit rating to Aa1 from Aaa on May 16, citing structural fiscal concerns and the unsustainable trajectory of US debt -- this contributed to renewed weakness in US treasuries, triggering another round of repricing of US government debt. "The 10-year UST yield jumped to 4.46 per cent as at May 19 from 4.17 per cent as of end-April, as markets digest the downgrade alongside concerns of reduced foreign appetite for US debt. "The selloff pressure was relatively contained within the US as MGS yields largely trended sideways, with the benchmark 10-year MGS yield sitting at 3.64 per cent as at May 19 from 3.68 per cent as of end-April,' it said. - Bernama
