At Guotai Fund's 2025 autumn institutional strategy conference themed "Long Wind and Vast Journey, Ten Thousand Miles of Cloud Path," Zhu Dan, Head of International Business and Fund Manager at Guotai Fund, shared insights on overseas policies and major asset allocation for Q3 2025.

**Review of H1 2025 Major Asset Performance**

The most distinctive feature of the first half was the significant decline in the US Dollar Index, which fell by more than 10%, leading to global liquidity overflow. Assets related to liquidity performed exceptionally well, including gold, emerging market stock indices, and emerging market currencies.

Data source: Bloomberg, Wind, as of June 30, 2025. Historical performance is for reference only and does not predict future results.

**Q3 2025 Overseas Macroeconomic and Policy Outlook**

**Economic Growth**: US economic growth may maintain resilience in Q3.

Although recent US non-farm payroll data showed weakness, we believe this is seasonal, and overall US economic growth in Q3 may maintain "resilience." However, within this resilience, we should observe structural divergence. US manufacturing overall remains in a relatively weak restocking phase, while overseas financial conditions have eased following the weakening of the US dollar in H1, supported by a weak dollar and strong US equities.

**Overseas Inflation**: US inflation is expected to peak and then decline, not constraining Fed rate cuts.

Both Bloomberg consensus expectations and Philadelphia Fed surveys predict that US inflation will rise in Q3 and fall in Q4, suggesting September may be the peak of this round of US inflation.

**Monetary Policy**: May form continuous easing next year.

Current market consensus expects a September rate cut, though there remains some disagreement about the magnitude. Next year, as Powell's term ends, the new Fed Chair may face political pressure from Trump and potentially be compelled to cut rates, with monetary policy possibly forming continuous easing next year.

**Fiscal Policy**: The US enters an era of major fiscal expansion.

With the Great American Act landing, major fiscal expansion in the US over the coming years is a relatively certain event. Currently, overseas markets are in a new round of fiscal policy expansion cycle, combined with monetary policy loosening expected in September, creating expectations for dual fiscal-monetary easing. Under such dual easing cycles, risk asset prices are typically supported, and we believe Q3 equity assets may relatively outperform safe-haven assets.

**Q3 2025 Overseas Major Asset Outlook**

For Q3 overseas major assets, we believe the dollar is short-term bullish but long-term bearish. In the short term, the dollar may strengthen temporarily, but from a long-term perspective of three to five or even ten years, the dollar faces significant depreciation pressure. Operationally, we suggest watching currencies to trade stocks, and watching stocks to trade bonds. For asset allocation, maintain balanced positioning between US and non-US markets. Given the medium to long-term downward trend of the dollar, we expect more opportunities in non-US markets represented by A-shares and Hong Kong stocks in coming years.

**US Stocks**

Low threshold for earnings beats, H1 weak dollar dividend will manifest. The weak dollar in H1 supported earnings for US multinational companies, but current US stock valuations are high with limited room for valuation expansion. We maintain a relatively neutral stance on US stocks.

**Gold**

Central bank gold purchases provide support, overall high-level consolidation. We believe gold maintains medium to long-term allocation value, but may enter consolidation in the short term. If gold pulls back in Q3, investors could consider gradual accumulation on dips.

**Silver**

Silver-gold ratio expected to repair upward. Relative to gold, silver may have greater catch-up potential. When the dollar reaches short-term highs, silver's allocation flexibility may be better than gold's in the near term.

**Copper**

Cross-regional arbitrage squeezes shorts, watch for early implementation risk of Section 232 tariff policies. Copper pricing has returned to fundamentals, with downstream demand led by AI and new energy vehicles remaining strong. We maintain a strategically bullish stance on copper for the coming years.

**Crude Oil**

Supply remains loose, geopolitical risks declining. OPEC countries continue increasing production, crude oil supply remains loose, but geopolitical risks are declining while demand may weaken.

**US Treasuries**

Inflation expectations limit rate cut magnitude, beware of liquidity shocks. Current inflation expectations don't support significant rate cuts, and with Q3, particularly from September, US Treasury supply pressure increasing, potential liquidity shocks warrant caution.

**Exchange Rates**

Dollar may stabilize and rebound temporarily. We believe the dollar has reached a temporary bottom and may see temporary rebounds ahead, though rebound magnitude and scope are limited.

On August 22, the global central bank symposium will commence, with Fed Chair Powell delivering remarks that markets are closely watching.

Zhu Dan believes Powell's potential hawkish statements at the symposium remain possible either way. Regarding Fed independence, we think Powell may very likely insist on not overly aggressive rate cuts, especially given current upward pressure on US PPI. Should rate cuts be delayed, assets first impacted would likely be those supported by liquidity, such as cryptocurrencies and small-cap Hong Kong stocks.

Looking ahead to next year, Fed rate cuts appear relatively certain. On one hand, US economic momentum continues declining, while on the other, political pressure from Trump means the next Fed Chair may be more dovish, with future Fed rate cuts potentially faster than current expectations.

**Risk Warning**

Views are for reference only and will change with market conditions, not constituting investment advice or commitments. Markets carry risks, invest with caution.