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In this article, we will take a closer look at the world’s biggest markets, the US and the UK. Both the US and UK markets hold strong and attractive prospects for investors; they allow you to diversify your portfolio through a variety of assets including stocks, bonds, and cash equivalents. Both these markets offer a strong investment credit base with a bigger and more diverse market, and increased liquidity.
The US market is especially buoyant because of the strength of the US dollar. Its stability helps create long-term wealth for the investors. It also provides the access to Fortune 500 companies from around the world, which in turn provides unparalleled opportunities for diversification of the portfolio. The tech firms of the market, including Tesla, Facebook, Amazon, Apple, Alphabet, and Microsoft, are especially significant, as they continue to rake in a significant share of revenues from outside the US, enabling a large part of the growth of the market.
Apart from these big, established firms, US has also seen the rise of innovative companies, opening the door for more investments, long-term sustainable investments, and a chance to be a part of growth journeys.
While market speculation is most rampant here than anywhere in the world, making research critical, it is also a lucrative space for investment visionaries since it accounts for 70% of the MSCI (Morgan Stanley Capital International) World Index2.
- Large-cap companies are those with a market capitalization value of more than $10 billion sourced from https://www.investopedia.com/terms/l/large-cap.asp
- MSCI World Regional Weights Through Time sourced from https://www.msci.com/our-solutions/indexes/developed-markets
- Performance of stock market over the last five years according to Trading Economics
Another big, lucrative space for investors is the UK, where the London Stock Exchange (LSE) is the pre-eminent exchange. The LSE is one of the biggest and most international of exchanges, with companies from more than 60 countries listed here4. These companies are not just voluminous but also diverse. Most of these are FTSE 100 companies, providing investors with a deep pool of international capital. LSE further enables diversification through more than 1000 exchange traded funds (ETFs) and exchange traded products (ETPs)4.
One important feature of LSE is the focus on sustainable investments, with net zero commitments from many companies now listed. The market is further made forward-looking by the access of real-time pricing for stocks from companies listed in the LSE’s Main Market. Other technology features implemented by the market are world-class market surveillance and security.
The LSE also connects Asia and North America in a big way. Specifically, it allows the trade of blue chip stocks from the US and US-listed Asian American depository receipts (ADRs) in London through the Global Equity Segment (GES).
- LSE information sourced from https://www.Londonstockexchange.com
- Large-cap companies are those with a market capitalization value of more than $10 billion sourced from https://www.investopedia.com/terms/l/large-cap.asp.
- Performance of stock market over the last five years according to Trading Economics
The Simple Summary
The UK and US markets both feature big opportunities with a large number of diverse companies from around the world, many of which are Fortune 500 and other massive, global firms. The diversity in both markets is also boosted by geographical diversity, providing opportunities for every kind of investor. As with every investment, however, we advise you to do a thorough research and stay in the know of market trends before making any investments.
Our CIO Insights will continue to provide regular updates to help you stay in the know. You can even check in with your relationship manager to discuss your investment portfolio. And finally, you can refer to this three-part series specially created for insights into overseas stock markets, and choose your investments based on our information.
If you are new to DBS, open your account now and connect with an investment advisor who will walk you through the investment opportunities in the overseas stock market.
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