"US rate cut trade" Part 2! Defensive nature + AI boom Is there also a chance for utility stocks?

The international economic symposium, the Jackson Hole conference, came to a close on the 24th. On the 23rd, Fed Chairman Powell pointed out that it is time to adjust monetary policy and almost explicitly mentioned a rate cut at the meeting in September.The Federal Reserve Board's monetary policy is shifting from tightening to easing. With central banks around the world cutting interest rates and embarking on a new cycle of monetary easing, which assets are becoming more attractive for investment?Done.

The Federal Reserve Board's monetary policy is shifting from tightening to easing.Central banks around the world are transitioning from tightening to easing.In the midst of a new cycle where central banks around the world are cutting interest rates and starting monetary easing, which assets are becoming more attractive for investment?

Following the remarks of Federal Reserve Board (FRB) Chairman Powell at the Jackson Hole meeting, it is widely expected that there will be a rate cut at the September Federal Open Market Committee (FOMC) meeting, and the yield on 10-year US Treasury bonds has fallen to about 3.8%. With the decline in yields on US bonds, the dividend yield on utility stocks has become relatively attractive and is one of the alternative options for asset management in a low interest rate environment.

Utility stocks are defensively strong and tend to have high dividend yields among stocks, making them an investment target as an alternative to bonds. In the market, it is expected that US interest rates will continue to decline, reducing concerns about the interest rate aspect of global utility stocks.

In addition, there has been a sharp increase in electricity demand due to the spread of artificial intelligence (AI) and decarbonization. At the same time, concerns about geopolitical tensions have spread, making high dividend defensive stocks attractive.

What are the attractions of investing in utility stocks now?
●Increased demand for electrical utilities due to the AI boom
According to Goldman Sachs,The rapid spread of datacenter and artificial intelligence (AI) is supporting the improvement of the long-term growth prospects for electrical utilities, as per Goldman Sachs.Goldman Sachs expects the electricity demand in the USA to increase by 2.4% from 2022 to 2030 (0% over the past 10 years),This increase in electricity demand is expected to lead to increased investment in infrastructure by electricity companies.Has been at 0% over the past 10 years. This increase in electrical utilities demand is expected to lead to an increase in investment in facilities by electrical utilities companies.

●Safe shelters
In the US stock market, essential goods, utilities, and healthcare are considered safe investment optionsDefensive stocks can demonstrate stability during overall market downturnsThe yield of US bonds is likely to continue decreasing over the next year, and utility stocks tend to perform well in periods of low interest rates and economic recessionIn addition, utility stocks are expected to provide a stable high dividend yield during periods of low interest rates. This year, the annual revenue growth rate of utility stocks is at least 6%, and it is possible that the dividends of utility stocks will continue to increase as the interest rate decreasesIn addition, utility stocks are expected to provide a stable high dividend yield during periods of low interest rates. This year, the annual revenue growth rate of utility stocks is at least 6%, and it is possible that the dividends of utility stocks will continue to increase as the interest rate decreasesIt is expected that the dividends of utility stocks will continue to increase in the future。

●The valuation is relatively low
Goldman Sachs pointed out that the utilities sector has risen significantly this year, but the valuation is still not high.