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For US investors equities look a tricky proposition. The S&P 500 is closing at record levels on an almost daily basis, even as non-financial US corporates report lacklustre earnings growth. Meanwhile, talk of the tapering of asset purchases by the Federal Reserve raises the prospect of an end to the easy central bank money that has driven the four-year bull market in stocks.
But for foreign investors the US market still looks attractive. In yen and euro terms, the S&P 500 is some way short of its peak.
For European and Japanese investors, US stocks offer exposure to the US economy, which looks to be returning to ruder health faster than other mature economies, with the added fillip of investing in dollars.
Should the Fed maintain an accommodative monetary policy, expect the S&P 500 to kick on from its present record levels. Should the Fed taper asset purchases, or even raise interest rates early in 2014, expect the dollar to strengthen sharply. That would cushion the blow of any stock market fall for foreign investors.
Even at present highs, US stocks still look good from overseas.
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